Ashrae D 90479

SMART GRID
APPLICATION GUIDE
Integrating Facilities
with the Electric Grid
COVERING:
• Regulatory environment
• Utility bill savings and potential revenue streams
• Distributed energy resources
• Strategies to accrue benefits
• Considerations for single- and multiple-facility
design and operations
• Maintaining building functions during
interruption, and constraints on deployment
Smart Grid
Application Guide
This publication was developed under ASHRAE’s Special Publication procedures and is not a
consensus document. It was developed under the auspices of ASHRAE Special Project 142 and
was overseen by the Smart Grid Guide Ad Hoc Committee appointed by 2018–2019 ASHRAE
President Sheila J. Hayter during the 2018–2019 Society Year.
Smart Grid Application Guide Ad Hoc Committee

Steven Bushby, Chair
NIST
Rolf Bienert, Member Brenda Chew, Member
Open ADR Alliance SEPA
Lawrence Markel, Member Shanti Pless, Member
ORNL NREL
Glenn Remington, Member David Robin, Member
Consumers Energy Retired
Authoring Team
Jake Thomas, PE Rich Hackner
GDS Associates, Inc. GDS Associates, Inc.
Scott Hackel, PE Xiaohui Zhou, PhD, PE, CEM
Slipstream Slipstream
Scott Schuetter, PE Lee Shaver
Slipstream Slipstream
Allen Jones Lilas Pratt
Allen Jones Consulting ASHRAE
Updates and errata for this publication will be posted on the

ASHRAE website at www.ashrae.org/publicationupdates.
Smart Grid
Application Guide
Atlanta
ISBN 978-1-947192-38-6 (paperback)
ISBN 978-1-947192-39-3 (PDF)
© 2020 ASHRAE
1791 Tullie Circle, NE · Atlanta, GA 30329 · www.ashrae.org
All rights reserved.
ASHRAE is a registered trademark in the U.S. Patent and Trademark Office, owned by the American
Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc.
ASHRAE has compiled this publication with care, but ASHRAE has not investigated, and ASHRAE
expressly disclaims any duty to investigate, any product, service, process, procedure, design, or the like that
may be described herein. The appearance of any technical data or editorial material in this publication does
not constitute endorsement, warranty, or guaranty by ASHRAE of any product, service, process, proce-
dure, design, or the like. ASHRAE does not warrant that the information in the publication is free of
errors, and ASHRAE does not necessarily agree with any statement or opinion in this publication. The
entire risk of the use of any information in this publication is assumed by the user.
While supported by the U.S. Department of Energy with the National Renewable Energy Laboratory,
neither the United States government nor any agency thereof, nor any of their employees, makes any war-
ranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or
usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not
infringe privately owned rights. Reference herein to any specific commercial product, process, or service by
trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorse-
ment, recommendation, or favoring by the United States government or any agency thereof. The views
and opinions of authors expressed herein do not necessarily state or reflect those of the United States gov-
ernment or any agency thereof and shall not be used for advertising or product endorsement purposes.
Except for rights reserved by the U.S. Government, no part of this book may be reproduced without per-
mission in writing from ASHRAE, except by a reviewer who may quote brief passages or reproduce illus-
trations in a review with appropriate credit; nor may any part of this book be reproduced, stored in a
retrieval system, or transmitted in any way or by any means—electronic, photocopying, recording, or
other—without permission in writing from ASHRAE. Requests for permission should be submitted at
www.ashrae.org/permissions.
Library of Congress Control Number: 2020930142
ASHRAE STAFF
SPECIAL PUBLICATIONS Cindy Sheffield Michaels, Editor
James Madison Walker, Managing Editor of Standards
Lauren Ramsdell, Associate Editor
Mary Bolton, Assistant Editor
Michshell Phillips, Senior Editorial Coordinator
PUBLISHING SERVICES David Soltis, Group Manager of Electronic Products
and Publishing Services
Jayne Jackson, Publication Traffic Administrator
DIRECTOR OF PUBLICATIONS
AND EDUCATION Mark S. Owen
CONTENTS
Preface................................................................................................... xi
Acknowledgments................................................................................ xiii
CHAPTER 1 Introduction ......................................................................1
1.1 THE PURPOSE OF THIS GUIDE .............................................................................. 1

1.2 WHAT IS NOT COVERED?.................................................................................... 2
1.3 GRID SERVICES DEFINED..................................................................................... 2
CHAPTER 2 Assessing the Value of Smart Grid Technologies—

The Regulatory Environment ...........................................5
2.1 MANDATED PROGRAMS—The California Example ......................................... 6

2.1.1 California Energy Commission Regulations ...........................................6
2.1.2 The Duck Curve and California Public Utility
Commission Regulations..........................................................................7
2.1.3 What are the Implications for Working in this Environment? ...............9
2.2 FREE-MARKET PROGRAMS—The Texas ERCOT Example .............................. 9
2.3 TRADITIONAL UTILITY PROGRAMS—THE SOUTHEASTERN U.S. EXAMPLE........... 11
2.4 REDESIGNED UTILITY BUSINESS MODEL PROGRAMS—
The New York Example...................................................................................... 13
2.5 WHOLESALE MARKET PROGRAMS AND STATE/FEDERAL INTERACTION—
The PJM Example .............................................................................................. 14
2.5.1 Wholesale Power Markets in the U.S. .....................................................15
v
vi | Contents
2.5.2 Opportunities to Participate in Wholesale Markets ..............................15

2.5.3 Legal Challenges Involved with Participating in
Wholesale Markets ...................................................................................16
2.6 HIGH SOLAR INTEGRATION MARKET PROGRAMS—THE HAWAII EXAMPLE ..... 18
2.6.1 Challenges of Moving to 100% Renewables.........................................19
2.6.2 Hawaii’s Response to Its Challenges......................................................20
CHAPTER 3 Assessing The Value Of Smart Grid Technologies—

Utility Bill Savings And Revenue Streams .......................23
3.1 DEFINING ELECTRICITY USAGE METRICS............................................................ 24

3.2 ELECTRIC UTILITY PROGRAMS............................................................................. 27
3.2.1 Demand-Side Management (DSM) Programs......................................27
3.2.2 Beneficial Electrification Programs.........................................................28
3.3 ELECTRIC UTILITY RATES....................................................................................... 28
3.3.1 Billing Units Defined ..................................................................................29
3.3.2 Dynamic Pricing .......................................................................................33
3.3.3 Rates for Distributed Generation ............................................................35
3.4 OTHER POSSIBLE SOURCES OF SMART GRID BENEFITS ...................................... 39
3.4.1 Demand Response Aggregators............................................................39
3.4.2 Grid Services, Ancillary Services, and
Power Quality Management ..................................................................40
3.4.3 Fuel Switching ...........................................................................................40
3.4.4 Transactive Energy and Future Opportunities.......................................40
3.4.5 Increasing Rental Rate and Value of Property .....................................41
3.5 VALUE STACKING................................................................................................ 41
3.6 FINDING INFORMATION ON SMART-GRID-RELATED
PROGRAMS IN YOUR AREA................................................................................ 41
3.6.1 Local Utility Programs ...............................................................................41
3.6.2 Demand Response Programs by State..................................................42
3.6.3 Wholesale Market Programs ...................................................................42
CHAPTER 4 Deploying Smart Grid Technologies—

Distributed Energy Resources ...........................................43
4.1 DEFINING DISTRIBUTED ENERGY RESOURCES .................................................... 43

4.2 UTILITY REQUIREMENTS AND CONSTRAINTS....................................................... 44
4.2.1 Process.......................................................................................................44
4.2.2 Technical Requirements ..........................................................................44
4.4.3 Rates ..........................................................................................................46
4.3 DEMAND MANAGEMENT.................................................................................... 46
4.3.1 Design Considerations .............................................................................48
Smart Grid Application Guide| vii
4.3.2 Operational Considerations....................................................................49

4.4 BEHIND-THE-METER GENERATION ...................................................................... 50
4.4.1 Photovoltaics ............................................................................................50
4.4.2 Gas-Fired Generation ..............................................................................54
4.4.3 Combined Heat and Power ...................................................................55
4.4.4 Fuel Cells....................................................................................................56
4.5 ENERGY STORAGE............................................................................................... 58
4.5.1 Battery Energy Storage............................................................................58
4.5.2 Other Electrical Energy Storage .............................................................61
4.6 COOL THERMAL STORAGE.................................................................................. 61
4.7 ADVANCED INVERTERS....................................................................................... 64
4.8 ADVANCED BUILDING LOAD CONTROLS.......................................................... 66
4.8.1 Mechanisms for Demand Management...............................................66
4.9 ELECTRIC VEHICLES............................................................................................. 69
4.10 DER CAPABILITIES COMPARISON....................................................................... 71

Strategies to Accrue Smart Grid Benefits ..........................73
5.1 ELECTRIC RATE SELECTION.................................................................................. 73

5.2 DEMAND MANAGEMENT STRATEGIES ............................................................... 74
5.3 EFFICIENCY AND CONSERVATION INTERACTIONS........................................... 74
5.4 SUPPLYING ELECTRICITY TO THE GRID................................................................ 75
5.5 STRATEGIC ADDITION OF INCREASED ENERGY USAGE .................................... 75
5.6 SOLAR GENERATION AND ACCESS TO FINANCING......................................... 76
5.7 PROVIDING ANCILLARY SERVICES .................................................................... 76
5.8 MICROGRID STRATEGIES .................................................................................... 77

Maintaining Building Functions During
Interruption Events...........................................................79
6.1 RESILIENCY .......................................................................................................... 79

6.1.1 Resiliency and Adverse Events ...............................................................80
6.1.2 Measuring Resiliency................................................................................81
6.1.4 Improving Resiliency ................................................................................83
viii | Contents
6.2 RELIABILITY........................................................................................................... 83
6.2.1 Interconnected Microgrids .....................................................................83
6.2.2 Backup Power Generation .....................................................................84
6.3 OFF-GRID OPERATIONS ...................................................................................... 84
6.4 RESPONSIBILITIES AND ACTIONS OF BUILDING OWNERS ................................. 84
6.4.1 Emergency Response Plan......................................................................84
6.4.2 Operation and Maintenance.................................................................85
6.4.3 Energy Efficiency ......................................................................................85

Constraints on Ability to Deploy Strategies ..............................87
7.1 POTENTIAL CONSTRAINTS TO CONSIDER........................................................... 87

7.1.1 Information and Communications Factors ...........................................88
7.1.2 Technology Factors..................................................................................90
7.1.3 Other Factors ............................................................................................92
7.2 PROCESS FOR EVALUATING WHETHER CONSTRAINTS
WILL AFFECT DEPLOYMENT STRATEGIES ............................................................. 94
CHAPTER 8 Building Design Considerations ......................................97
8.1 BUILDING CODES, STANDARDS, AND LEED ....................................................... 97

8.1.1 2018 International Green Construction Code® Powered by
ANSI/ASHRAE/ICC/USGBC/IES Standard 189.1-2017 (IgCC/189.1) ......... 98
8.1.2 LEED v4.1....................................................................................................99
8.1.3 ISO 50001:2018—Energy Management System ................................. 101
8.2 BUILDING AUTOMATED DEMAND RESPONSE STRATEGY MODELS................. 101
8.2.1 Centralized Model................................................................................. 101
8.2.2 Decentralized Model ............................................................................ 102
8.2.3 Hybrid Model ......................................................................................... 102
8.3 BUILDING-TO-GRID-RELATED COMMUNICATION PROTOCOLS .................... 104
8.3.1 OpenADR ............................................................................................... 104
8.3.2 BACnet ................................................................................................... 106
8.3.3 VOLTTRON .............................................................................................. 108
8.3.4 Other Protocols...................................................................................... 109
8.3.5 Cybersecurity Issues .............................................................................. 110
8.4 BUILDING SYSTEM DESIGN CONSIDERATIONS ............................................... 111
8.4.1 HVAC System ......................................................................................... 112
8.4.2 Lighting System ...................................................................................... 114
8.4.3 Electrical System.................................................................................... 115
8.4.4 Building Automation System ................................................................116
8.4.5 Occupant Comfort Considerations .................................................... 117
8.4.6 Future Capabilities ................................................................................ 117
Smart Grid Application Guide| ix
CHAPTER 9 Microgrids ...................................................................... 119
9.1 DEFINITION ....................................................................................................... 119

9.1.1 IEEE Definition and Additional Terminology........................................ 120
9.1.2 Role of the Microgrid Controller .......................................................... 121
9.1.3 Differences from Backup Power.......................................................... 122
9.2 INTENTIONAL ISLANDING AND RESILENCE ..................................................... 122
9.3 ADDITIONAL MOTIVATIONS TO ESTABLISH A MICROGRID............................ 123
9.4 DESIGN CONSIDERATIONS .............................................................................. 123
9.4.1 IEEE 1547.4-2011 ..................................................................................... 124
9.4.2 IEEE P2030.9-2019 ................................................................................... 124
9.4.3 HOMER Microgrid Design Software ..................................................... 125
9.5 MULTI-USER MICROGRIDS ............................................................................... 125
CHAPTER 10 Glossary ..........................................................................127
CHAPTER 11 Acronyms........................................................................135
CHAPTER 12 Bibliography .................................................................. 139
CHAPTER 13 References..................................................................... 147

PREFACE
Changes occurring in the electric grid infrastructure will require new design and operation
considerations for buildings and how they interact with the electric grid. Facilities can be operated
in ways that support grid operations (economic efficiency, environmental protection, and/or reli-
ability) while potentially lowering their own costs of operation by managing loads and storage to
contribute to balancing grid-wide demand and changes to the generation mix. As the modern
grid develops, building automation systems are able to receive signals about the condition of the
grid and current prices and values for electricity and grid services. Building operators will have
increasing economic and reliability incentives for responding appropriately to grid conditions. A
key requirement for success of the smart grid will be communication and cooperation between
electric service providers and building energy management systems to effectively manage supply
and demand.
An effective energy user/energy provider partnership will depend on bidirectional communi-
cations—the ability to manage facilities’ equipment, process systems, and controls in response to
communication with a smart electrical grid and communicate information about those electrical
loads and on-site resources for generating electricity. The expected results will be more efficient
and reliable power system operations and designs. A building manager able to coordinate building
operations with the grid stands to reap significant economic benefits by sharing in the resulting
improvements in grid operational and investment efficiencies. Such energy user/energy provider
integration must support a wide range of energy management applications and electrical service
provider interactions, including on-site generation, demand response (defined in The U.S. Code
of Federal Regulations as “a reduction in the consumption of electric energy by customers from
their expected consumption in response to an increase in the price of electric energy or to incen-
tive payments designed to induce lower consumption of electric energy” [GPO 2019]), electrical
storage, peak-demand management, direct load control, and other related energy management
functions.
However, building operators often do not have a good understanding of the complexity of
utility rate structures and resource management programs. Moreover, as the smart grid develops,
the nature of the grid services that building owners may be able provide will continue to evolve,
and the value propositions, tariffs, and requirements will vary with locality. ASHRAE, the Smart
Electric Power Alliance (SEPA), and the OpenADR Alliance have participated in the develop-
xi
xii | Preface
ment of this guide. The partnership is committed to helping facility owners, designers, and oper-
ators provide safe, comfortable, efficient, and affordable conditions in the built environment.
There is an immediate need to provide useful resources for facility personnel to identify and eval-
uate the myriad of smart-grid-related options and opportunities as they become available. Smart
Grid Application Guide: Integrating Facilities with the Electric Grid provides guidance to building
owners, managers, and designers for understanding the smart grid and applicable standards and
regulations. It also offers guidance on the design and operation of systems in this new smart-grid
environment. The guide focuses on the decisions and actions needed to prepare a building for the
smart grid.
Acknowledgments
This smart grid application guide is a product of the vision, dedication, and hard work of
many people. It began with discussions among the President Elect Advisory Committee assisting
presidential member Sheila Hayter prepare a theme and priority activities for her presidential
year. The ideas and guidance from Sheila, Hugh Crowther, and Malcolm Dennis Knight were
particularly helpful as I was tasked to turn the idea into a reality.
In addition to the considerable task of providing meaningful information and guidance to
building professionals, one of the goals of the guide was to open the door for ASHRAE to build
partnerships with other organizations that are playing central roles in making the future smart
grid a reality. Special thanks are due to the Smart Electric Power Alliance (SEPA) and the
OpenADR Alliance for their partnership in this effort and the contributions of their representa-
tives Brenda Chew and Rolf Bienert throughout the process.
To manage the process, a Presidential Ad Hoc Committee was formed from people drawn
from key constituencies within ASHRAE. Their names are listed at the front of this guide. Each
of these individuals freely contributed their time and talents by attending monthly web meetings
and reviewing drafts provided by the authoring team throughout the process. Although not for-
mally authors, each of these people made important contributions to the final product.
The authoring team collectively represents a range of technical and policy expertise, including
building automation and control, building system commissioning, product design, standards
development and utility regulatory matters. This team developed the content of the guide and
their breadth of expertise was a critical factor in creating a useful and comprehensive end product.
The authoring team would like to thank the following researchers and industry experts for provid-
ing relevant resources and references, sharing their expertise on the states of the arts, and for
answering questions from the team:
• David Blum, Lawrence Berkeley National Laboratory

• Jie Cai, University of Oklahoma
• Micah Casteel, Fuel Cell Energy
• Phil Coleman, Lawrence Berkeley National Laboratory
• Andrew Cotter, Smart Electric Power Alliance
• Patrick Dalton, Xcel Energy
• Riley Denu, Madison Gas & Electric
xiii
xiv | Acknowledgments
• Andrew Gouin, Xcel Energy

• Nelson Hastings, National Institute of Standards and Technology
• David Holmberg, National Institute of Standards and Technology
• Srinivas Katipamula, Pacific Northwest National Laboratory
• Tim Kingston, Gas Technology Institute
• Troy Miller, GE Power
• Erika Myers, Smart Electric Power Alliance
• Steve Nieland, Faith Technologies
• Doug Reindl, University of Wisconsin
• Patricia Rowley, Gas Technology Institute
• Tom Stanton, National Regulatory Research Institute
• Dave Toso, Madison Gas & Electric
• Andy Walker, National Renewable Energy Laboratory
• Ken Walz, Madison College
• Otto Van Geet, National Renewable Energy Laboratory
I would also like to acknowledge the contributions of some ASHRAE staff members. Lilas
Pratt provided excellent logistical support and thoughtful suggestions throughout the process,
based on experience from similar projects. Cindy Michaels and Mary Bolton ably transformed the
manuscript into a high-quality, professional publication.
The industry is in the early stages of a dramatic transition to a time when building loads, gen-
eration resources, and energy storage will be managed in ways that cooperate with and support the
needs of a smart electric grid based on renewable energy sources. The hope is that this guide will
provide a valuable jump start to the building professionals who will make this transition happen.
Steven T. Bushby, Fellow ASHRAE

Chair
INTRODUCTION
Traditionally, electric utilities provided electricity, which buildings consumed. The only inter-
action between these entities was the utility bill. This is rapidly changing. In 2018, buildings
accounted for approximately 75% of the nation’s electricity consumption (EIA 2019b). Buildings
around the world are increasingly generating electricity or dynamically modifying their electricity
consumption to control building operating costs. And, electric utilities/systems operators are
increasingly using more detailed electricity usage data to optimize the operation of the electric
grid. This has been enabled by the ongoing development of the “smart grid.” The U.S. National
Institute of Standards and Technology (NIST) defines the smart grid as “a modernized grid that
enables bidirectional flows of energy and uses two-way communication and control capabilities
that will lead to an array of new functionalities and applications” (NIST 2014b). These two-way
communications can be at many points in the electricity supply chain from generation, to trans-
mission, to distribution, to consumption. This smart grid guide is concerned with those two-way
communications and control capabilities that involve interactions between facilities and the elec-
tric grid. ASHRAE Standard 201, Facility Smart Grid Information Model, states a facility is “any
kind of building or collection of buildings, and all of the electrical loads or local generation
sources contained within them or controlled by the facility owner” (ASHRAE 2016b). The elec-
tric grid can include not only electric utilities, but also energy wholesalers, retailers, and aggrega-
tors.
These smart grid interactions make it possible for facilities to be active participants in the sup-
ply and demand of electricity rather than just their historical role as passive consumers. This
enables facilities to be providers of electricity and ancillary services to the grid, to reduce demand
during periods of high demands and electricity prices, or to be compensated for assisting with grid
reliability and power quality.
1.1 PURPOSE OF THIS GUIDE

The purpose of this guide is to assist building owners, designers, and operators in understand-
ing smart grid basics and identifying and evaluating the myriad of smart-grid-related options and
opportunities currently available. This guide will also provide resources and references to applica-
ble codes, standards, and regulations as well as steps needed to prepare a building for the smart
grid. Specifically, it will outline:
1
2 | Introduction
• The value of smart grid technologies—the regulatory environment and utility bill savings and
potential revenue streams;
• The ongoing deployment of smart grid technologies—distributed energy resources, strategies
to accrue benefits, maintaining building functions during interruption, and constraints on
deployment;
• Building design and operation considerations—individual building design considerations and
multiple-facility design and operations;
• A glossary of smart-grid-related terms and a list of acronyms; and
• Additional resources and references.
1.2 WHAT IS NOT COVERED?

One challenge with developing a smart grid guide is choosing what topics not to include, as
an exhaustive document would be excessively long. This guide uses the two-way communications
and control requirement expressed in the NIST definition of the smart grid to help guide which
topics to include. Topics such as demand limiting to avoid demand and ratchet charges only
receive limited coverage because these can be done based on a prior knowledge of the applicable
electric tariffs and do not require two-way communications with the grid. At the same time, if a
facility has invested in the metering and control equipment needed for demand limiting, they
have almost everything necessary to participate in demand response programs that are triggered
by signals or pricing information received from the grid. This fine line of distinction was chosen
to keep this guide from becoming an encyclopedia instead of a guide. However, totally ignoring
these closely related topics would not be helpful either. As a compromise, this guide references
these topics and lists other sources for more detailed information.
1.3 GRID SERVICES DEFINED

An important concept to the guide is understanding how smart grid components allow facili-
ties to interact directly with the electric grid. Given this interaction, important services can be
provided by a facility with smart grid to the grid. Those grid services are varied and can be defined
differently in the energy industry. Table 1.1 defines the grid services that a facility might be able
to provide and gives example market programs and smart grid components associated with those
services. Throughout the guide, reference will be made to these services.
Smart Grid Application Guide| 3
Table 1.1 Definitions and Examples of Grid Services
• Reduction in peak • Reduction in peak • Frequency regulation • Voltage compensation

What the facility
demand to keep the demand with • Ramping for distribution circuits

provides
grid from being increase in

overloaded minimum demand
• Reduction in peak
demand to lower
prices
• Replaces expensive • Minimizes need to • Grid needs to buy time • Inductive loads on long
peaker plants curtail renewable for slower responding distribution circuits can
Why is it needed by
• Defers need for generation generators to respond cause line voltage

transmission or • Lowers costs by to unplanned problems and
the grid?
distribution capacity shifting energy generator outages equipment overheating.

upgrades usage from high • Grid needs to buy time
• Allows the grid time cost periods to low for slower responding
to respond to cost periods generators to ramp
temporary generator
or transmission
problems.
• Capacity programs • Time-of-use rates • Ancillary services • Ancillary services
Example Market
• Non-wires solutions • Real-time rates

Programs
• Non-wires solutions
• Dispatchable • Energy storage • Variable-frequency • Advanced inverters

Example Applicable
distributed generation systems drives (VFDs)

• Lighting systems • Advanced inverters
Systems
• Elevator systems
Note: Graphics from DOE (2019).

ASSESSING THE VALUE OF
SMART GRID TECHNOLOGIES—
The Regulatory Environment
In most parts of the United States, the ability of a building or campus to participate in the smart
grid will be heavily influenced by rules and regulations. These may include electric utility tariffs, state
regulations, wholesale market regulations, and federal regulations. With over 3200 electric utilities in
the U.S. (DOE 2015b), it would be impossible for this guide to cover every location and regulatory
permutation.
Instead, this chapter of the guide covers several representative markets scattered around the coun-
try. These range from markets where the ability to participate in demand response (an area of the smart
grid) or the ability to mount rooftop solar panels is mandated in the building codes (illustrated by Cal-
ifornia), to areas which take a free market approach to the supply and demand for electricity (illustrated
by Texas). The markets also range from traditional utilities where a single company may be responsible
for the entire supply of electricity (illustrated by the southeastern U.S.), to markets that are being rede-
signed to encourage distributed energy resources (illustrated by New York and its “Reforming the
Energy Vision” initiative). It also covers markets where facilities might participate in the smart grid at
the wholesale level (illustrated by PJM, which covers all or parts of thirteen states plus the District of
Columbia), and markets with massive amounts of rooftop solar capacity (illustrated by Hawaii). These
markets are summarized in Table 2.1.
Table 2.1 Summary of Market Examples
Example Reason for Inclusion
2.1 Mandated Programs—The California Example Example of a market where the inclusion of smart-grid-related
solutions is being mandated for new buildings.
2.2 Free-Market Programs—The Texas ERCOT Example of utilizing smart grid solutions in a market that has been
Example fully deregulated.
2.3 Traditional Utility Programs—The Southeastern Example of utilizing smart grid solutions in traditional investor owned,
U.S. Example municipal, and cooperative utility environments.
2.4 Redesigned Utility Business Model Example of utilizing smart grid solutions in a market that is replacing
Programs—The New York Example the traditional utility model with a performance-based model.
2.5 Wholesale Market Programs and State/Federal Example of utilizing smart grid solutions in a market where retail
Interaction—The PJM Example customers can participate in the smart grid using federally regulated
wholesale markets.
2.6 High Solar Integration Market Programs—The Example of utilizing smart grid solutions in a market with large
Hawaii Example amounts of behind-the-meter renewable energy.
5
6 | The Regulatory Environment
The regulatory environment is changing rapidly, and these representative markets were cho-
sen because they often serve as early indicators of trends for the rest of the country when deal-
ing with these same issues. By understanding these various representative regulatory markets,
users of this guide will be in a better position to recognize similarities in their own markets,
likely trends that they will face in the future, and what is and is not permitted in their area.
2.1 MANDATED PROGRAMS—The California Example

Why This Example is Relevant
• Examines a major market where smart grid deployments are being mandated for new
buildings
• Often serves as a model for other states adopting regulations
One approach to allowing buildings to participate in the smart grid is through regulations. Cali-
fornia has long expressed a strong desire to conserve energy and to maximize the percentage of
renewable energy deployed on the electrical grid. To aid in these goals, the state has created various
smart-grid-related regulations that govern how buildings are designed and operated. Most of these
regulations are issued by the California Energy Commission or the California Public Utilities Com-
mission (CPUC).
2.1.1 California Energy Commission Regulations

The CEC issues the Building Energy Efficiency Standards for Residential and Nonresidential
Buildings, commonly known as the California Energy Code (CEC 2018). Section 110.12 of this
regulation, “Mandatory Requirements for Demand Management,” establishes the mandatory
requirements for demand management that most commercial buildings and some residential
buildings are required to meet. Plans for how the building will comply with these regulations are
required in order to obtain a building permit for a new building and for some building alterations.
Proof of actual compliance with these requirements is required in order to obtain an occupancy
permit. The requirements say that the applicable buildings need to be demand response capable
(see Section 3.2.1 of this guide). Various portions of the section apply to all demand responsive
controls, to demand responsive zonal HVAC controls, to demand responsive lighting controls,
and to demand responsive electronic message center (EMC) controls. The regulations do not
mandate that the building owner or occupant make use of the demand response system, but the
regulations do mandate that the facility be capable of directly or indirectly receiving
OpenADR 2.0 demand response signals. (OpenADR 2.0 is covered in Section 8.3 of this guide.)
The California Energy Code also contains requirements for making buildings solar ready in
Section 110.10, “Mandatory Requirements for Solar Ready Buildings,” which apply to most
buildings that do not already have a photovoltaic (PV) system installed. These regulations cover
the required sizes, orientation, and shading restrictions for a solar zone, reservation of space for
inverters and metering equipment, reservation of space for pathways for interconnecting the
equipment, and main electrical service panel requirements. The code does not require that solar
panels be installed, but it does attempt to ensure that the owner of the building will be able to eas-
ily install solar panels in the future if they desire to do so.
Figure 2.1 shows the demand response (Section 110.12) and solar-related
(Section 110.10) requirements outlined in bold and the other energy code regulations that
trigger the demand response requirements as connected boxes. To understand the require-
ments in Section 110.12, it is first necessary to understand that these requirements are not
triggered unless one of the requirements in Section 120.2, Section 130.1, Section 130.3, or
Section 130.5 are encountered first. The requirements in Section 110.12 can also optionally
be used as an alternative for meeting some of the requirements of Section 110.10.
A detailed explanation of the demand response and solar requirements of the California
Energy Code is outside of the scope of this guide. The CEC has such an explanation available
and it can be found on the OpenADR Webinar Series web page (https://www.openadr.org/
webinar-series) under the “Webinar: California 2019 Title 24 Code Update Specifies
OpenADR” heading.
2.1.2 The Duck Curve and California Public Utility Commission

Regulations
Prior to the introduction of renewable energy resources such as wind and solar into the electri-
cal grid, power plants generally fell into one of three categories. Baseload power plants such as
large coal-fired power plants or nuclear power plants provided the minimum amount of energy
Figure 2.1 Demand response and solar-related requirements in the 2019 California Energy Code.
that the grid always needed, such as the amount of energy needed late at night. These power
plants provided the lowest cost energy. Many of these power plants take several days to start up or
shut down. Load-following power plants, such as combined-cycle power plants burning natural
gas, cost more than baseload power plants to operate and are ramped up and down throughout the
day as the demand for electricity increased and decreased. Peak-following power plants, such as
simple-cycle natural gas turbines, are the most expensive to run and only operated for a few hours
on the few highest demand days of the year when they were needed to maintain grid reliability.
As California began implementing various energy and environmental initiatives, the Califor-
nia transmission grid operator, California Independent System Operator (CAISO), started inves-
tigating the effect that these initiatives would have on the electrical grid. They plotted the net
load, which they define as “the difference between forecasted load and expected electricity pro-
duction from variable generation resources,” for various times of the year over a range of several
years (CAISO 2016). The graph for a typical spring day became known as the “duck curve”
because of its shape (Figure 2.2).
CAISO discovered that if the trends continued, then at certain times of the year the variable
output from renewable resources such as solar would place additional stress on the electrical grid.
As the number of deployed PV systems increased each year, the net demand at midday would
keep decreasing, and there would be a risk of overgeneration of electricity. (An even more extreme
example of the impact of integrating large amounts of solar PV is covered in Section 2.6.) Over-
generation of electricity does not just result in waste; it also causes reliability problems. In addition
to the potential for overgeneration during the day, as the PV systems shut down at the end of the
day, there would be a rapid increase in the net demand that load-following power plants might
Figure 2.2 The California ISO duck curve.

Source: CAISO (2016)
find difficult to match. The combination of these effects makes it difficult for traditional baseload
and load-following power plants to work in the way that they were originally designed to func-
tion. The general characteristics of this curve are not unique to California. For example, in the
Midcontinent Independent System Operator (MISO) region, which extends from Manitoba,
Canada to Louisiana, U.S., a similar problem can occur in the early morning when wind genera-
tion peaks while the demand for electricity is still low.
To continue to gain the advantages of increasing the percentage of renewable energy on the
grid while maintaining reliability, California is enacting various new regulations. Many of the reg-
ulations are issued by the California Public Utilities Commission (CPUC). Some of the major
regulations include the following:
• CPUC Electric Rule 21 (http://www.cpuc.ca.gov/Rule21/), which covers the interconnection

of advanced inverters with the distribution grid. (See Section 4.7 for a discussion of advanced
inverters.)
• CPUC Rulemaking R.14-07-002 (https://www.cpuc.ca.gov/General.aspx?id=3934) and
CPUC Decision D.16-01-044, which cover net energy metering, including the net metering
of combined solar/storage systems. (See Sections 3.3.1 and 4.2.3 for a discussion of net
metering.)
• The Self-Generation Incentive Program (SGIP) (https://www.cpuc.ca.gov/sgip/) and
accompanying CPUC Decision D.17-10-004 SGIP Equity Budget, which provide incentives
for the installation of behind-the-meter qualifying distributed energy systems.
In addition to these regulations, on February 26, 2019, a CPUC Administrative Law Judge
rejected the submitted plans of the three investor-owned utilities in California for energy storage
required under California Assembly Bill AB 2868. He ruled that the plans, which relied almost
entirely on utility owned storage, conflicted with AB 2868’s requirements that solutions be “with-
out any bias towards any ownership model” (CPUC 2019). As of this writing, the CPUC has not
yet voted on whether to adopt the Administrative Law Judge’s ruling.
2.1.3 What are the Implications for Working in this Environment?

The use of regulations to promote smart-grid-related solutions increases the likelihood that
building designers and operators will use these solutions, but it also creates a situation where it is
important to constantly stay up-to-date with the latest regulations and rulings. As with most reg-
ulatory bodies, both the CEC and the CPUC have provisions for receiving emailed updates on
topics that may be of interest to their affected parties. These updates, along with information
from various online smart grid newsletters, can help keep building designers and operators
informed of evolving regulations.
2.2 FREE-MARKET PROGRAMS—The Texas ERCOT Example

A second approach to allowing buildings to participate in the smart grid is through the free
market. This is an approach that has been adopted by Texas, where the sale of electricity has
largely been deregulated. Vertically integrated investor-owned utilities (IOUs) have been broken
up into separate independent businesses dealing with generation, transmission, distribution, and
the sale of energy. (Vertically integrated means that the utility owns everything from the generation
to the customer’s meter. Investor-owned utilities are utilities that are owned by stockholders as
opposed to municipal utilities, which are owned by a locality, or cooperatively owned utilities,
which are owned by their customers.) Former customers of these IOUs have multiple options
regarding who to purchase their actual electricity from. Municipal utilities and cooperatively
owned utilities may also choose to offer their customers the same option. This gives customers in
these areas a wide variety of choices of their energy supplier and rate plan. Customers in these
areas go to the Texas Public Utilities Commission’s website (www.powertochoose.org), enter their
zip code, and answer a few questions. Based on their answers, they are presented with options for
a variety of energy provider companies, fixed/variable/indexed rates, plan durations, percentages
of renewable energy, and so on. They are also given the customer satisfaction ratings for each
option. For example, if a residential customer entered the zip code 75023 (Plano, TX), the website
would give them almost 200 rated options. Commercial and industrial users can look under the
“About Shopping” tab and find a list of over 60 companies that service nonresidential customers.
The Public Utility Commission does not regulate the rates that companies charge; it only moni-
tors the energy provider companies to make certain that they honor the terms of the contracts that
they establish with their customers.
The Electric Reliability Council of Texas (ERCOT) operating region of Texas covers about
75% of the land area of Texas and operates the transmission grid for about 90% of the electrical
load in Texas (ERCOT 2019). Texas is a special case within the U.S. for several reasons:
• There are no high-voltage alternating current power lines connecting the ERCOT region to
any other state. There are high-voltage direct current (dc) lines instead. These dc lines allow
Texas to exchange power with other states under limited circumstances without the risk of
problems on the Texas electrical grid affecting these other states. The limited nature of these
dc interconnections means that Texas has little ability to draw power from other states to help
stabilize its electric grid if it encounters reliability problems.
• Because of its decision to only allow direct current connections to other states, the ERCOT
region of Texas is largely independent of oversight by the Federal Energy Regulatory
Commission (FERC). (See Section 2.5 regarding regulation by FERC.) This gives it more
flexibility over how its wholesale markets operate.
• Texas has a very large amount of grid scale intermittent renewable generation. As of 2017,
Texas has the largest installed wind capacity of any state in the U.S. (approximately three
times the size of the next closest state) and ranks fifth among the states for solar capacity (EIA
n.d.). Any variation in the output of these resources must be accounted for in real time—
again, without the option of drawing power from other states to assist in this effort.
• Texas has no capacity market (see Section 2.5.2 regarding capacity markets), meaning that no
generators are paid just for being available when needed. Texas depends on real time and day-
ahead markets to balance its grid instead, with a scarcity pricing mechanism in place to
incentivize availability of sufficient grid capacity.
These factors can combine to make Texas a fertile testing ground for the use of smart grid
technologies to help in the running of the electrical grid. The nonprofit Pecan Street project
(www.pecanstreet.org) in Austin, TX, for example, consists of over 1000 homes and businesses
that have been heavily instrumented to allow for testing of smart grid technologies. It is fre-
quently used by smart grid companies to test new devices and approaches and its data have been
used by over 2500 university researchers around the world.
Depending on where a customer is located and which energy provider they are using, they
may have many or few opportunities to use smart grid technologies in their facilities. Customers
who wish to participate in retail market demand response programs will generally do so through
the company, municipal utility, or cooperatively owned utility that sells them energy. Customers
who wish to participate in wholesale markets may also do so but must meet more requirements.
The requirements for distributed generation that wishes to participate in the markets varies
depending on factors such as the capacity of the generator. (See http://www.ercot.com/services/
rq/re/dgresource for more details.)

The diversity of potential suppliers of energy means that you may need to investigate multiple
energy suppliers to determine whether it makes sense to make use of smart grid technologies in
your facility. Also, it is not unusual for customers to change suppliers periodically either due to
being presented with a better offer for service from a supplier or due to dissatisfaction with the
current supplier. This means that an approach that was deployed while working with one supplier
may or may not work with another supplier.
2.3 TRADITIONAL UTILITY PROGRAMS—The Southeastern U.S. Example

• Covers a market where smart grid deployments are taking place in traditional utility envi-
ronments
• Provides an example of all three major types of traditional utility models—investor-owned utili-
ties, cooperative utilities, and municipal utilities
• Includes an example where the federal government is a major supplier of wholesale elec-
tricity
In the traditional vertically integrated utility model, a single company owns the generation,
transmission, and distribution of electricity, and that company has a monopoly over the sale of
electricity. These utilities generally fall into three categories—IOUs, which are owned by stock-
holders; municipal utilities, which are owned by governments; and cooperatives, which are owned
by their members. Municipal utilities and cooperatives sometimes do not own their own genera-
tion and instead purchase energy from generation companies.
Investor-owned utilities generally follow the traditional “regulatory compact” model. This
model was created approximately 100 years ago when much of the nation did not have electricity.
The cost for an individual customer to have electric lines run to their location would have been
prohibitive. To encourage the electrification of the nation, regulators offered utilities monopolies
and a guaranteed rate of return on the money that they spent building out the grid. Utilities could
afford to build out the grid because their guaranteed customer base and rate of return made them
a low risk investment, allowing them to amortize the cost over a long period of time. In return,
customers received regulated rates and a guarantee of service without having to directly pay for the
full cost of having the infrastructure needed to provide that service.
Municipal utilities and cooperatives can also finance their infrastructure investments over a
long period of time due to their guaranteed customer base. In these cases, though, the rates that
these utilities charge are not controlled by outside regulators. In the case of municipal utilities,
they are controlled by government officials who need to answer to their constituents. In the case
of cooperatives, they are controlled by the members of the cooperatives since those members share
the roles of owners and customers.
In many areas, IOUs are still the most common business model. In these markets, utilities only
make a profit on what they spend building the electrical system; operating costs are a pass-through
item that do not earn any profit. In these cases, customers may find that the utility demand response
programs are limited since limiting the need for more infrastructure limits profits. Alternatively,
IOUs that are allowed to earn a rate of return from installing demand response programs may install
them but then only activate them if the high demand for electricity threatens to cause power out-
ages. Municipal and cooperative utilities are more likely to activate demand response resources to
help lower peak energy prices rather than just to respond to grid emergencies.
For example, in 2017 in the six southeastern U.S. states that are mostly or totally in areas that
do not have wholesale power markets (Alabama, Florida, Georgia, North Carolina, South Caro-
lina, and Tennessee), IOUs provided approximately 63% of the energy sold but only called on
20% of the demand response that they enrolled in demand response programs (based on 2017
data from [EIA 2018a]). Almost all the demand response activation came from two IOUs that
called on 100% and 62% of the demand response that they had enrolled. Two IOUs did not offer
any demand response programs. Of the eight remaining southeastern IOUs, six never called a
demand response event in 2017. Municipal utilities, which enrolled roughly the same percentage
of their average annual demand in demand response programs as IOUs, called on these resources
for almost 47% of the demand that they had enrolled. Cooperatives enrolled about half as much of
their average annual demand in demand response as IOUs and called on these resources for
approximately 57% of the demand that they had enrolled.
In addition to participating in retail markets directly, commercial and industrial custom-
ers of municipal and cooperatives utilities who were in the federally owned Tennessee Valley
Authority (TVA) area also had the opportunity to participate in the wholesale demand
response market through an aggregator program sponsored by the TVA. Customers of
municipal and cooperative utilities in North Carolina often had the opportunity to partici-
pate in demand response programs that were offered by organizations that their utilities
belonged to, even if their utility did not offer demand response directly. Many of these
municipal and cooperative utilities also offered subsidized grid-enabled water heaters. (U.S.
Department of Energy regulations allow these grid-enabled water heaters to have larger stor-
age capacities than would otherwise be allowed so that they will be less likely to run out of
hot water while responding to a demand response event or while being used for grid fre-
quency regulation.) The ability for municipal or cooperative utility customers to participate
in demand response through a government energy provider such as TVA or through organi-
zations that their own utilities belong to is not unique to the southeastern U.S. Many states
in the central and northwestern U.S. have similar programs.

When working in areas dominated by vertically integrated investor-owned utilities, the opportuni-
ties for participating in smart-grid-related programs may be limited, but not nonexistent. When work-
ing with a municipal or cooperative utility, demand response programs may be offered through
organizations that these utilities belong to even if the utilities do not offer demand response programs
directly. In areas with government wholesale energy providers such as TVA, demand response may be
offered by these wholesale energy providers even if the local utility does not offer such programs.
Figure 2.3 Demand response in the Southeast. Only the six southeastern states that are wholly or
mostly outside of wholesale markets are shown.
2.4 REDESIGNED UTILITY BUSINESS MODEL PROGRAMS—

The New York Example
• First major market where the traditional utility model is being revised to better align
with desire for improved grid resiliency, environmental impact, and cost reductions.
• Utilities are being incentivized to seek out alternatives to building more infrastructure
such as by deploying smart grid solutions.
A regulated approach that differs significantly from the regulatory compact approach is the perfor-
mance-based model that is being adopted in areas such as New York state. New York adopted this
approach, known as “Reforming the Energy Vision” (REV), due to concerns with grid resiliency prob-
lems that were revealed by Hurricane Sandy in 2012, concern with rising electric bills, and concern
with environmental costs (NY Gov. 2016). New York decided that to address these problems it needed
to replace the 100-year-old regulatory compact model where utilities were paid for what they built with
a model where utilities were paid for how they performed. Under the new model, vertically integrated
utilities were broken up and were encouraged to look for non-wires solutions (NWS) that were more
cost effective than building more infrastructure. (An older term for NWS was non-wires alternatives,
or NWA.) Under the old business model, utilities would not have been allowed to earn any rate of
return on these solutions since they would have been categorized as operating expenses. Under the new
business model, utilities were allowed to earn a rate of return on their NWS and were provided with
the opportunity to earn performance bonuses depending on how well these solutions performed.
The Brooklyn-Queens Demand Management (BQDM) project is often pointed to as an early

success story for this initiative. As REV was first getting started, Consolidated Edison was faced with
the need to service increasing levels of electrical demand in the Brooklyn-Queens area. The traditional
solution would have been to propose spending approximately $1.2 billion for a new substation and
associated infrastructure. As an alternative, Consolidated Edison proposed a solution that achieved the
same net result while spending only $305 million on traditional solutions plus a budgeted amount of
$200 million on NWS. In return for the less expensive approach, Consolidated Edison was allowed to
earn a fixed rate of return on its investments, a rate of return of up to an additional 0.45% dependent
upon its achieving a 41 MW demand reduction with the alternative measures, a rate of return of up to
0.25% for increasing the diversity of distributed energy resources in the targeted area, and a rate of
return of up to 0.30% for achieving a lower cost of energy than would have been achieved with tradi-
tional approaches. In addition, Consolidated Edison was allowed to earn up to 30% of the savings that
were associated with reducing the amount of energy used (State of New York Public Commission
2014).
The program encountered various challenges along the way but was largely successful and
came in significantly under budget. The program has been extended beyond its original termina-
tion date by making use of the money that remains in the budget.

In areas that are adopting approaches similar to REV, stay alert for opportunities to receive
incentives for using smart-grid-related technologies to achieve comparable results to traditional
wires solutions. Even after the initial contracts are awarded, utilities may continue to look for
more solutions as they adapt to changing conditions.
2.5 WHOLESALE MARKET PROGRAMS AND STATE/FEDERAL

INTERACTION—The PJM Example
• Largest wholesale energy market in the U.S.
• Provides an alternative to working through local utility on demand response or energy
storage programs when that is not desired or an option
• Legal battles involving the participation of retail customers in the wholesale markets
are often fought here first, setting legal precedent for the rest of the U.S.
When the system of electric generation, transmission, distribution, and consumption was first
established, the boundaries were fairly clear. Electricity generation occurred in large power plants.
The electricity generated in these power plants was then stepped up to very high voltages (typi-
cally one hundred kilovolts or higher) and sent over high voltage transmission lines. At various
points along the transmission line, distribution substations would draw power from the line, step
it down (typically to voltages of tens of kilovolts), and then send it to a local distribution grid. At
various points along the local distribution grid, neighborhood distribution transformers would
step the voltage down again and send it to local customers. Each portion of this chain of genera-
tion, transmission, and distribution was a separate market with its own rules. To eliminate gaps in
regulation of these markets, the U.S. Federal Power Act was passed in 1935. It established what
were, at the time, fairly clear boundaries between federal and state jurisdiction. In general, the
federal government was responsible for regulating the interstate transmission grid and for the
wholesale markets that used these grids. States were responsible for regulating most generation
facilities, for the distribution grid, and for retail sales of electricity.
As noted in the U.S. Department of Energy’s (DOE) report titled, “Federal/State Jurisdic-
tional Split: Implications for Emerging Electricity Technologies,” (Dennis et al. 2016), with the
introduction of “behind-the-meter” (installed on the customer’s side of the electric meter) genera-
tion and storage of electricity, retail customers participating in wholesale capacity markets, and
state efforts to subsidize the wholesale prices that their preferred generation sources receive, the
boundary has become very blurred. This blurring of the lines has led both to new opportunities
for customers to participate in and be compensated by the wholesale markets, and to an increased
risk that participation in these markets will be drawn into question through lengthy court battles.
As the largest transmission grid operator in the U.S. (PJM 2018) and one of the largest demand
response markets in the U.S., PJM Interconnection market is where these legal battles are often
fought first. (PJM originally stood for the names of the original founding member states—Penn-
sylvania, New Jersey, and Maryland.)
2.5.1 Wholesale Power Markets in the U.S.

Although there are some subtle differences between regional transmission organizations
(RTOs) and independent system operators (ISOs), from the perspective of building designers and
operators they are the same. They are not-for-profit organizations that operate the transmission
grid and select which generators and demand response resources will operate at any given time.
They make these selections with a goal of minimizing the wholesale cost of electricity while still
guaranteeing the reliability of the electric grid. Their operations are generally overseen by the
Federal Energy Regulatory Commission (FERC). (The ERCOT region is largely independent of
oversight by FERC due to its lack of synchronous connections with other states. ERCOT is regu-
lated by the Public Utility Commission of Texas and the Texas Legislature.) As shown in
Figure 2.4, there are currently seven ISOs or RTOs in the U.S.:
• The California Independent System Operator (CAISO)

• Southwest Power Pool (SPP)
• Electricity Reliability Council of Texas (ERCOT)
• Midcontinent Independent System Operator, Inc. (MISO)
• PJM Interconnection (PJM)
• New York Independent System Operator (NYISO)
• ISO New England (ISO-NE)
Links to the applicable websites related to demand response in each of the ISOs and RTOs in
the U.S. are listed in Section 3.6.3.
2.5.2 Opportunities to Participate in Wholesale Markets

Facilities that are participating in the federally regulated wholesale markets can potentially do
so through one or more of several approaches, including capacity markets, energy markets, and
ancillary services markets. Capacity markets, which is where most demand response resources in
PJM participate, can provide payments to demand response resources for being available to be
called upon when needed. This is analogous to paying a firefighter to be on duty at a fire station
rather than only paying them when they are actually fighting a fire. Energy markets only pay
Figure 2.4 ISO/RTO Map (updated to show MISO presence in Canada).

Source: FERC (2019)
resources for the amount of energy that they actually provide to the grid or the amount of load
that they actually remove from the grid. When they are not being called upon to provide energy or
a demand reduction, they do not get paid. Ancillary services markets pay resources for other ser-
vices that help support the reliability of the grid. Examples of these services including volt/VAR
support and frequency regulation. Advanced inverters (see Section 4.7) in a facility, for example,
can participate in volt/VAR support programs that provide reactive power to the grid (see
Section 3.1). Advanced inverters, grid-responsive electric water heaters, and variable-speed drives
in a facility can have their operation modified slightly to dynamically increase or decrease their net
load on the grid and provide frequency regulation services (see Section 8.4.1). It is possible for a
resource to participate in more than one of these markets at the same time. Usually, retail electric
customers will find that their loads and generation sources are too small to compete directly in the
wholesale electricity markets. In these cases, retail electric customers may choose to work through
an aggregator (see Section 3.4.1 for a discussion of aggregators).
2.5.3 Legal Challenges Involved with Participating in

Wholesale Markets
The permission for customer-side resources to participate in the wholesale markets is gener-
ally brought about as a result of FERC issuing one or more Orders. The main Orders that are
applicable to the participation of facilities in the wholesale markets are shown in Table 2.2.
FERC Order 745 requires that
when a demand response resource participating in an organized wholesale energy market

administered by a Regional Transmission Organization (RTO) or Independent System
Table 2.2 Main FERC Orders Affecting Wholesale Markets

Topic Description Document URL
https://www.ferc.gov/EventCalendar/
Demand response compensation FERC Order 745—Final Rule Files/20110315105757-RM10-17-
in organized wholesale energy 000.pdf
markets FERC Order 745—Supreme https://elibrary.ferc.gov/idmws/search/
Court Opinion fercgensearch.asp
https://www.ferc.gov/whats-new/comm-
Electric storage participation in FERC Order 841—Final Rule
meet/2018/021518/E-1.pdf
markets operated by RTOs and
ISOs FERC Order 841A—Order on https://elibrary.ferc.gov/idmws/
Rehearing and Clarification common/opennat.asp?fileID=15249056
https://elibrary.ferc.gov/idmws/search/
Participation of distributed energy Docket Number RM18-9-000.
fercgensearch.asp
resource aggregations in markets (No final rule has been written
Set Date Range to “All” and Docket
operated by RTOs and ISOs at this time.)
Number to RM18-9.
Operator (ISO) has the capability to balance supply and demand as an alternative to a
generation resource and when dispatch of that demand response resource is cost-effective
as determined by the net benefits test described in this rule, that demand response
resource must be compensated for the service it provides to the energy market at the mar-
ket price for energy, referred to as the locational marginal price (LMP). (FERC 2011)
(The LMP is a single price which takes into account generator costs, transmission congestion,
and system losses associated with providing electricity at a specific location.) This means that if a
demand response resource is capable of balancing supply and demand by reducing load, then it
must be allowed to compete on an equal basis with generators and it must be compensated at the
same rate as a generator that achieved the same result, as long as doing so is cost effective.
Demand response resources can only participate in the organized wholesale markets with the per-
mission of their state’s regulators. The issuance of FERC Order 745 resulted in a large increase in
demand response, especially in the PJM capacity market. Generation companies, led by the Elec-
tric Power Supply Association (EPSA), filed suit against FERC in the Circuit Court of Appeals
for the District of Columbia Circuit. This court threw out FERC Order 745 on the grounds that
it impermissibly intruded into markets that the Federal Power Act reserved for the states. The
lower court decision was appealed to the U.S. Supreme Court, which ultimately ruled that FERC
had not exceeded its authority and reinstated the FERC order.
The recently issued FERC Order 841A is similar to FERC 745 except that it applies to the
participation of energy storage that is located on the distribution system or behind-the-meter in
wholesale markets. As with FERC Order 745, it requires that the applicable resources be paid the
LMP for their participation. Unlike FERC Order 745, FERC Order 841A was challenged by the
National Association of Regulatory Utility Commissioners (NARUC). NARUC’s members
include public utility commissioners from all fifty states, the District of Columbia, Puerto Rico,
and the U.S. Virgin Islands. In July 2019, NARUC filed a suit in federal court, claiming that the
new FERC order crossed the state/federal boundary that the Supreme Court set in the FERC
Order 745 case because it does not allow states to bar customers from participating in wholesale
markets.

The potential for facilities to earn money by participating in demand response programs
in the capacity markets is significant. In 2018 in the PJM market alone, demand response
earned $598.6 million (Monitoring Analytics 2019). If demand response had not been per-
mitted to bid into the PJM market, then a larger amount of money would have been paid to
generation companies to provide the same capacity. This makes it a frequent target of law-
suits from generation companies who are struggling with flat or declining demand. These
lawsuits, which may take years to work their way through the courts, can lead to market
uncertainty which can seriously hamper the deployment of demand response in the wholesale
markets since it could potentially result in facilities being unable to recover their investment
in the technology needed to participate in these markets. This uncertainty needs to be fac-
tored in whenever deciding whether to participate in programs that are not based on settled
law.
2.6 HIGH SOLAR INTEGRATION MARKET PROGRAMS—The Hawaii

Example
• First state to set a legal requirement for the state to switch to 100% renewable energy
• Highest retail electricity prices in the U.S. provides opportunities to try new approaches
here first
• Electrically isolated islands make smart grid technologies critical to switching to 100%
renewable energy while still ensuring grid reliability
Hawaii has the highest retail electricity prices in the U.S.—over two and a half times the U.S.
median price of approximately ten cents per kilowatt-hour. (See Figure 2.5.) This is largely
because most electricity is generated with oil that must be shipped into the state. As a result of the
high price and also by virtue of being the southernmost state in the U.S. and therefore having the
highest solar insolation, Hawaii has the highest percentage of behind-the-meter PV generation of
any state in the U.S. At 8% of the total electrical energy generated in the state, it is nearly twice
the percentage of the next closest state (EIA 2019a).
In 2015, Hawaii became the first state to commit to generating 100% of its electricity from renew-
able resources. Target dates are 30% by 2020, 40% by 2030, 70% by 2040, and 100% by 2045 (Hawaii
State Legislature 2015). Since that time, four other states plus the District of Columbia and Puerto
Rico have enacted similar legislation. (See Table 2.3.) Several other states and cities have set nonbind-
ing goals.
In the Hawaii Public Utilities Commission’s (PUC) “Report to the 2019 Legislature on Hawaii’s
Renewable Portfolio Standards,” the PUC noted that Kauai Island Utility Cooperative (KIUC) had
already achieved its 2030 goal and that the HECO Companies (Hawaiian Electric Company, Inc.,
Maui Electric Company, Ltd., and Hawaii Electric Light Company, Inc.) were “highly likely” to
achieve their 2030 goal and that its 2030 goal was achievable provided that “reasonably expected
amounts of utility-scale renewable energy projects and distributed generation are successfully devel-
oped and integrated on the utility system” (Hawaii PUC 2018). It also noted that the costs for the
renewable projects that were under development or recently proposed were less than the costs for most
fossil-fueled generation.
Figure 2.5 2017 U.S. retail electricity prices.

Source: EIA (2018b)
Table 2.3 Legally Binding Renewable Energy Requirements in the U.S.

State Year Enacted Requirement for Generating Electricity from Renewables
Hawaii 2015 100% by 2045
California 2018 100% by 2045
Washington, DC 2018 100% by 2032
New Mexico 2019 100% by 2045
Maryland 2019 50% by 2030, investigate 100% by 2040
Nevada 2019 100% by 2050
New York 2019 100% by 2050
Puerto Rico 2019 100% by 2050
2.6.1 Challenges of Moving to 100% Renewables

The PUC report did note several challenges that Hawaii faces in trying to reach its final goal
of 100% renewables. Some of these were already discussed in the section covering the Duck
Curve (Section 2.1.2), but several problems are even more prevalent in Hawaii, including prob-
lems due to low rotational inertia, grid stability, and distribution system capacity.
Traditional generators have a large amount of rotational inertia due to their large mass or to
the large volumes of water, etc., that are driving these generators. This inertia tends to slow the
changes in line frequency that can be brought about when one of the other generators in the sys-
tem goes offline. The slower change in line frequency makes it easier for the electric utility to
bring on other resources before the frequency excursion causes parts of the grid to shut down. It
also makes it easier for the utility to avoid situations where the frequency becomes unstable,
swinging between too high and too low. Conventional PV inverters lack this rotational inertia,
making it more difficult to keep the grid stable. In 2017 and 2018, the islands of Kauai and Maui
suffered island-wide power outages due to grid stability problems.
Hawaii also suffered from distribution system capacity problems. Conventional PV inverters
tend to export power to the grid whenever possible, even if doing so is not beneficial to the grid.
As of 2017, the largest part of HECO’s renewable generation is from distributed PV sources. This
is almost as large as the next two largest sources combined. If these systems inject too much elec-
tricity into the grid, it can lead to line voltage problems. To compensate, the utility is forced to
curtail the use of more traditional generators, which makes the rotational inertia problem worse.
Utilities also have business problems when large deployments of behind-the-meter solar lower
their revenue from the sale of electricity while increasing their costs of maintaining a stable electrical
grid. The resulting shift of these costs to the customers who are still purchasing electricity from the
utility can encourage more customers to shift to behind-the-meter solar, eventually leading to what has
been termed a “death spiral” for the utilities.
2.6.2 Hawaii’s Response to Its Challenges

Hawaii has been making several changes to help it achieve its goal of 100% renewable energy
while still maintaining a reliable electrical grid. Among these changes are:
• HECO’s elimination of accepting new customers into its Net Energy Metering program. The Net
Energy Metering program paid customers for supplying electricity to the grid whether that
electricity was needed or not. It has been replaced with a variety of programs (Hawaii Electric n.d.)
that may only pay for electricity exported to the grid when there is a demand, that pays more for
electricity exported to the grid at certain times, or that allows the utility to curtail a customer’s
ability to export power to the grid when the distribution circuit is at capacity.
• The introduction of new requirements for behind-the-meter inverters under Hawaii’s Rule 14H
(HEC 1988). Rule 14H is similar to California’s Rule 21 except that it adds requirements for volt-
watt control to reduce power when the grid voltage is high and frequency-watt control to adjust
power output when the line frequency is too high or low.
• The introduction of new demand response programs. HECO introduced a variety of direct load
control programs along with a program to study the use of OpenADR in the hospitality industry.
(OpenADR is covered in Section 8.3.)
• The investigation of changes to utility ownership models and utility regulations. Hawaii
commissioned an extensive study (London Economics International LLC 2019) that investigated
the effect that changing the utility ownership models or utility regulations would have on achieving
state energy goals, maximizing customer cost savings, enabling a competitive distribution system,
addressing conflicts of interest, aligning stakeholder interests, and minimizing transition costs. The
approaches that were considered as well as the impact of adopting these approaches are
summarized in Figure 2.6. The details of the report are beyond the scope of this guide, but
generally it was found that switching to either an all-investor-owned utility system or an all-
cooperatively-owned utility system would raise already high rates for many customers, while
switching to some type of a performance-based regulation system would reduce rates by between
0% and 9.2%, depending upon the approach and the local utility. (See Section 2.4 for a discussion
of New York’s approach with performance-based regulations.)
Figure 2.6 Results of various market and regulatory changes on Hawaii's goals.
Source: Hawaii Public Utilities Commission (2018)
Note: Independent Grid Operator (IGO) is similar to the ISOs and RTOs discussed in
Section 2.5. Hawaii Electricity Reliability Administrator (HERA), is an independent government
body that would oversee reliability and provide grid access oversight. PBR stands for perfor-
mance-based regulation.

Areas that are pursuing 100% renewable energy goals will be faced with grid stability issues
that may force them to make both technical and regulatory changes to meet their goals at a rea-
sonable cost. These changes will present both opportunities and challenges for building owners,
designers, and operators who wish to make use of smart grid technologies. Many of these chal-
lenges will occur in Hawaii first.
ASSESSING THE VALUE OF
SMART GRID TECHNOLOGIES—
Utility Bill Savings and
Revenue Streams
As described in the previous chapter, one important step in evaluating the benefits that smart
grid technologies might provide to building owners and operators is understanding the legal and
regulatory environment in which a specific building exists. Another important source of benefits
that should be fully understood and assessed are sources of revenue streams available to building
operators through their relationship with local utilities. There are several ways to monetize
deployment of smart grid technologies that will be discussed in this chapter, including:
• Rebates earned through participation in specific utility programs,

• Savings achieved through lower utility bills or wholesale market interaction, and
• Tax incentives.
This chapter of the guide will first provide an overview of the types of programs utilities typi-
cally have specific to smart grid technologies. These programs can help encourage or place limita-
tions on smart grid deployment, so it is vital to understand what such programs and policies often
mean for program participants. Each utility has very distinct programs and policies, so although
this chapter will provide a general overview of typical programs, it is important to understand the
policies of the specific utility that provides service to the building or campus under consideration.
After reviewing utility programs, this chapter will provide a primer on utility rates. Rates for
commercial and industrial accounts can be complicated and might involve several different fac-
tors. Understanding the various components of typical utility bills and how deployment of tech-
nology can produce savings under various rate structures is important for assessing the value of
smart grid technologies and actively participating in the smart grid.
Finally, this chapter will touch on other means of achieving savings from the smart grid,
including grid services, ancillary services, power quality management, and fuel switching. The
chapter will end with a discussion of potential future opportunities to generate additional benefits
from smart grid technologies.
23
24 | Utility Bill Savings and Revenue Streams
3.1 DEFINING ELECTRICITY USAGE METRICS

Why This Section is Important
• It includes a discussion of electric rates benefits requires an understanding of basic
units measured by and ultimately billed by electric utilities.
• It also discusses electric utility programs and rates requires a basic understanding of
the various units of measurement used by utilities. This section will briefly describe key
physical concepts, the understanding of which is important before describing utility
programs available to commercial accounts. Furthermore, these units are often the
units for which utilities will charge customers.
Demand. The electric demand is the instantaneous amount of electric power that is required
in any given moment of time to serve all electrical loads currently drawing power. Demand is
measured in watts (W) but is expressed on retail electric bills as kilowatts (kW). Electric demand
meters often measure the average demand over a short period of time, such as 15 minutes or 30
minutes. For instance, a 30-minute demand represents the average demand required over a 30-
minute period.
Electric Energy Consumption (Energy). The electric energy consumption is the total quantity
of electrical energy consumed over a certain time period. Electric energy consumption is mea-
sured in units of watt-hours (Wh) or kilowatt-hours (kWh). Usually, billing for kWh consump-
tion covers an entire month. The total quantity of electricity consumption is often referred to in
short-hand as “energy” by electric utility industry personnel.
Load Factor. The load factor is a measure of a customer’s utilization of grid resources. It is a
ratio of the customer’s average demand to the customer’s peak demand. Many components of the
electric grid are sized to meet peak demand requirements, so utility costs are minimized when
load factor is high. Therefore, utilities often seek to incentivize customers to achieve a high load
factor. Equation 3.1 shows the computation for load factor, which is expressed as a percentage.
LF = E  D  Hr  100% (3.1)
where
LF = load factor
E = electricity consumption, kWh
D = peak demand, kW
Hr = number of hours over which energy is computed
The following example will help illustrate the concept of load factor. In the example,
Building A is a church with low occupancy and electricity consumption during the week but
a high demand during Wednesday and Sunday services. The building consumes 30,000 kWh
in a given July and has a maximum demand of 100 kW. The load factor for the church in that
month is 40%. Building B is a small manufacturing site running three shifts, although the
third shift is a smaller crew than the first two shifts. This site consumes 60,000 kWh in the
same July and also has a maximum demand of 100 kW. Building B has an 81% load factor. A
lot of the cost associated with the distribution grid and with provided service to both con-
sumers is the same in this example, because the 100 kW demand drives those costs. However,
Building B has a much higher utilization of that demand as evidenced by a load factor that is
twice as high as Building A. That means Building B will cost the utility less per kWh sold to
(a)
(b)
Figure 3.1 Example load shapes for (a) low and (b) high load factors.
serve. This makes sense economically. An electric grid is a capital-intensive form of infra-
structure with a lot of fixed costs relative to many other businesses. Those fixed costs are
spread over more kWh when a customer has high load factor.
Figure 3.1 provides an example hourly load shape for July for Buildings A and B to
demonstrate low and high load factors, respectively. The figure shows the demand at any
given time and the area shaded red represents electrical energy consumption. For both sites
the peak demand is 100 kW. The load factor for each site can be visually understood to be the
percentage of the light teal rectangle that is covered: 40% of the area is red for Building A
and 81% for Building B.
Reactive Power. Reactive power is “the portion of electricity that establishes and sustains the mag-
netic fields of alternating-current equipment” (EIA 2019c). Inductive loads, such as motors and trans-
formers (found in televisions, computers, and fluorescent lighting ballasts) require a magnetic field to
operate. Therefore, inductive loads require two kinds of electrical current: 1) real power, which is the
power to actually accomplish the work of creating light, heat, or other machine outputs, and b) reactive
power, which sustains the magnetic field. Reactive power is measured in kilovolt-amperes reactive
(kVAR).
With a fixed voltage, the limiting factor in typical transmission and distribution systems is the cur-
rent that flows from generators to the loads. As the reactive power consumed by a given load increases,
the amount of current which must flow to that load also increases. However, the real power (the por-
tion for which the generator is paid) will not increase proportionally. Because there is a cost associated
with increasing the current-carrying capacity of the electric grid, utilities sometimes charge for
increased reactive power demand.
Reactive power is provided by generators, synchronous condensers, capacitors, and
advanced inverters. Therefore, on-site generators, especially when coupled with advanced
inverters, might be a resource for providing reactive power to the distribution grid.
Power Factor. Power factor is the ratio of real
power, measured in kW, and apparent power,
measured in kilovolt-ampere (kVA). As shown in
Figure 3.2, alternating current power is com-
posed of real and reactive power, which, when
graphed on a complex coordinate system, creates
a triangle. The hypotenuse of the triangle is the
apparent power, and the cosine of angle  is the
power factor. A high power factor means reactive
power is low, which is desirable for a utility’s
costs. Therefore, utilities will sometimes charge
for either reactive power or low power factor.
Inductive loads, such as motors, have a lower
power factor while resistive loads, such as incan-
descent lighting or resistive water heating ele-
ments, use only real power and have essentially a
100% power factor. Adding capacitor banks on-
Figure 3.2 Power factor. site can correct for low power factor.
3.2 ELECTRIC UTILITY PROGRAMS

• Electric utilities offer a myriad of programs that may allow a building professional to
accrue benefits from smart grid technologies.
• Identifying the types of programs offered by utilities prepares a building professional
for researching what may be available.
Many electric utilities offer programs that allow customers to be involved in helping utilities
achieve cost reductions or achieve strategic goals. Often these programs are intended to encourage
customers to make changes in end-use equipment or the ways and times they use electricity to
achieve an avoided cost benefit (reduction in cost to generate and transmit electricity) for the util-
ity. In turn for customer participation, the utility typically provides a form of incentive. Whether
mandated by a regulatory agency or developed by the utility, these programs can represent one
means by which smart grid elements installed in commercial buildings can generate value for the
customer. Other programs are designed to ensure distributed resources, such as rooftop solar gen-
eration, are connected safely to the distribution grid and that customers are compensated for
excess energy fed back onto the grid. To fully obtain the financial benefits of smart grid technolo-
gies, a building owner or operator should reach out to their electricity provider and determine
which programs might generate sources of value from free services, rebates for equipment
upgrades, or even direct compensation for participating in the program. Usually, utility programs
are described on utility websites and utility staff are available to discuss specific program require-
ments and features with any customer. Interacting directly with the local utility is usually the most
reliable and direct source of information about which programs could generate additional value to
a building owner or operator when deploying smart grid systems.
3.2.1 Demand-Side Management (DSM) Programs

Programs that are designed to change the way retail consumers use electricity are called
demand-side management (DSM) programs. Such programs encourage customers to reduce
overall electricity consumption or to change the timing of their consumption. The programs gen-
erally fall into one of two categories: (1) energy efficiency/conservation and (2) demand response.
Utilities compensate customers for their participation in these programs using various methods.
In the following sections, methods used by utilities to directly compensate customers for partici-
pations in such programs are discussed. However, it is also important to note that these programs
can also provide benefit by taking advantage of certain electric rate structures that result in lower
power bills. When trying to quantify the benefits of smart grid technologies, it is important to
understand there may be multiple sources of benefits to identify. A primer on electric rates is pro-
vided Section 3.3.
Energy Efficiency and Conservation Programs. Energy efficiency involves making changes to
a building or its equipment to reduce energy usage without impacting functionality. A simple
example is replacing a 12 seasonal energy efficiency ratio (SEER) air-conditioning unit with a 16
SEER unit. Both units, if sized appropriately, will provide the same space cooling function, but
the 16 SEER unit will do so while consuming less electricity. Whereas energy efficiency is a pas-
sive approach once efficient equipment is installed, conservation involves modifying human
behavior to save energy. An example of a conservation approach is to train staff to turn off lights
when leaving a room. Many electric utilities have formal programs in place that incentivize com-
mercial and industrial customers to participate in various energy efficiency programs. Incentives
structures vary, but include financial incentives and service incentives. Some smart grid compo-
nents may qualify for a utility program rebate, so building operators and owners should investigate
whether their local utility have any programs in place that might help provide value for smart grid
components. One example might be a utility that provides a rebate for installation of smart con-
trollable thermostats.
Demand Response Programs. Demand response programs are similar to energy efficiency pro-
grams. The key difference is that demand response programs are programs that often aim to
reduce peak loads during a few hours of the year, whereas energy efficiency programs aim to
reduce the total quantity of energy consumed. Utilities with demand response programs in place
offer incentives through bill credits or rate designs for customers that are able to reduce their load
during targeted peak hours. Many components of the smart grid can enable a building to partici-
pate in demand response programs and accrue benefits. Demand response is covered in more
detail in Section 4.3.
3.2.2 Beneficial Electrification Programs

Some utilities have programs that seek to encourage customers to replace use of fossil fuels
with electricity in a way that reduces overall energy consumption and energy costs. Such programs
are often called beneficial electrification programs. These are distinctively different from DSM pro-
grams because the net result is more electricity consumption. Often, the incentives of the program
are designed to encourage off-peak electricity consumption. One example is a program encourag-
ing thermal storage heating systems that replace propane, natural gas, or oil-fired systems. The
thermal storage systems increase overnight electricity consumption but in a way that the overall
energy impact is reduced relative to the legacy fossil fuel system. Another example is programs
designed to encourage adoption of electric vehicles. Electric vehicle programs may include incen-
tives to ensure charging takes place largely overnight when utility costs are their lowest. When
evaluating possible sources of value for smart grid components, a building owner, operator, or
designer should determine whether the local electric utility has any beneficial electrification
incentives available.
3.3 ELECTRIC UTILITY RATES

• A lot of benefit can be derived from the smart grid through reducing the cost of elec-
tricity.
• Understanding the various utility rate components and rate structures allows develop-
ment of better strategies to maximize benefits of smart grid components.
• Alternative rate structures, such as dynamic pricing and rates for distributed genera-
tion, are defined in this section. These optional rates may provide opportunities to
achieve greater benefits than under standard electric rates.
Many applications of smart grid technologies allow for building owners and operators to gen-
erate benefits through lower electric power bills. To both understand how savings are being gener-
ated and to develop strategies to maximize power bill reductions available through deployment of
smart grid technologies, building owners, designers, and operators should understand the various
components that are most likely to appear in an electric bill. But first, it is helpful to define the
billing units that might be used by utilities to calculate a power bill.
3.3.1 Billing Units Defined

There are a myriad of approaches that electric utilities might use to compute the power bill for
a commercial account, including physical quantities of electricity that are metered and methods of
computing billing quantities based on those metered components. This section will define the key
physical and billing quantities that are used most often in the industry today.
Demand Charges. Utilities can calculate and bill on various types of demand. Typically, the
single highest demand registered by the meter during a certain time interval is called the non-
coincident peak (NCP) demand. However, the interval of time over which that demand is measured
can vary, ranging from 15 minutes to 60 minutes. Generally, the shorter the time duration of the
demand measurement, the higher the NCP billing demand will be for a month. Sometimes a util-
ity rate will compute billing demands during certain time frames of the day and have on-peak and
off-peak billing demands. Or, demands during certain hours may be referred to as coincident peak
(CP) demands. Sometimes, the NCP is defined as the demand that occurs outside of a CP-
defined time period. Instead of a CP, the demand may be called an on-peak demand. Another form
of billing demand is excess demand, in which the difference between the maximum demand and
some CP demand is computed and the customer is charged for that excess amount.
Some rates might also include demand ratchets in which the billing demand is based on the
currently measured demand or some fraction of a prior demand. For instance, one rate might
define the billing demand as the higher of the metered 30-minute demand in the current month
or 95% of the highest demand metered in the most recent June, July, and August. It is very
important to understand whether a building’s electric rate includes a demand ratchet as, in some
instances, one day or even one hour of exceptionally high demand can result in ratchet demand
charges that apply for many months or even a full year.
Electric rate tariffs, available from the utility, will always define how the billing demands are
calculated. It is important to understand these concepts to be able to maximize the value of
deploying smart grid technologies. Chapter 5 of this guide will explore ways to deploy smart grid
technologies to accrue benefits, and will discuss how the types of demand defined in the rate tariff
can be targeted to achieve bill reductions.
Energy Billing Structures. Although the amount of energy to be billed is often calculated con-
sistently from utility to utility, there are various rate structures that utilities use to bill customers
for energy consumption. Energy charges are expressed in terms of dollars per kWh or cents per
kWh. The simplest form of energy charge is often referred to as a flat charge in which all kWh in
a month are billed at a fixed rate per kWh. It is not uncommon to also see seasonally different flat
energy charges, such as a flat rate for four summer months and a different flat rate for the remain-
ing eight months of the year.
A slightly more complicated energy charge structure is a block structure. In block structures,
total energy is divided into pieces and billed at different rates. The rate tariff defines the amount
of energy in each block of a block rate. A declining block structure is one in which the price per
kWh declines as more kWh are consumed in a month. In a declining block structure, the overall
average cost per kWh decreases the more energy a customer consumes in a month. Inversely, an
inverted block structure charges more per kWh as a customer uses more energy. Inverted block
Table 3.1 Calculation of Energy Charges Under Block Energy Rate Structures
Total Energy: 10,000 kWh
Declining Block Energy Charge Structure Inverted Block Energy Charge Structure
Rate per Rate per

Block Definitions kWh kWh Charges Block Definitions kWh kWh Charges
First 1500 kWh $0.105 1500 $157.50 First 1500 kWh $0.080 1500 $120.00
Next 6000 kWh $0.095 6000 $570.00 Next 6000 kWh $0.095 6000 $570.00
Over 7500 kWh $0.080 2500 $200.00 Over 7500 kWh $0.105 2500 $262.50
Total 10,000 $927.50 Total 10,000 $952.50

Average Cost per kWh $0.09275 Average Cost per kWh $0.09525
Total Energy: 50,000 kWh

Declining Block Energy Charge Structure Inverted Block Energy Charge Structure
Rate per Rate per

Block Definitions kWh kWh Charges Block Definitions kWh kWh Charges
First 1500 kWh $0.105 1500 $157.50 First 1500 kWh $0.080 1500 $120.00
Next 6000 kWh $0.095 6000 $570.00 Next 6000 kWh $0.095 6000 $570.00
Over 7500 kWh $0.080 42,500 $3400.00 Over 7500 kWh $0.105 42,500 $4462.50
Total 50,000 $4127.50 Total 50,000 $5152.50

Average Cost per kWh $0.08255 Average Cost per kWh $0.10305
structures are designed to encourage conservation and efficient use of energy. Table 3.1 demon-
strates the calculation of energy charges on a bill for 10,000 kWh and 50,000 kWh under example
declining and inverted block structures.
Even more complicated than block energy charge structures are hours use of demand (HUD)
block structures. These structures are designed to provide a price incentive for customers to maxi-
mize load factor. A HUD block looks very similar to an energy block, but the size of the each
block is based on the billing demand. HUD is computed as the energy divided by the demand. In
the example shown in Table 3.2, Building 1 has an energy of 12,500 kWh and a demand of
50 kW, resulting in a HUD of 250 hours (12,500 kWh/50 kW). Even though these structures
have demand in their name, they are indeed energy charges and the rates will be expressed on a
per kWh basis. HUD blocks will almost always have declining charges per kWh for energy in the
higher blocks because only customers with higher load factors will pay the lower rates in the
higher HUD blocks. So, a building operator faced with a rate structure that includes an HUD
block should remember that increasing the load factor in such a rate will reduce the average cost
per kWh for energy under the rate. Table 3.2 demonstrates the computation of energy charges for
two loads that each have the same billing demand but use a different amount of energy in a given
month.
Table 3.2 Calculation of Energy Charges Under Hours Use Demand

Block Energy Rate Structures
Example 1 Building: HUD Block Energy Changes with Low July Load Factor
Demand 10 kW
Energy 12500 kWh
Hours Use Demand (kWh/kW) 250 hr
Load Factor (HUD/Hours in 34%
Mo)
Billing Demand, Rate per Energy
Structure Definition HUD kWh
kW kWh Changes
First 200 Hours Use Demand 200 × 50 = × $0.0800 = $800.00
Next 200 Hours Use Demand 50 × 50 = × $0.0600 = $150.00
Next 200 Hours Use Demand 0 × 50 = × $0.0450 = $0.00
Over 600 Hours Use Demand 0 × 50 = × $0.0350 = $0.00
Total 12,500 $950.00
Average Energy Charge per kWh $0.0760
Example 2 Building: HUD Block Energy Changes with High July Load Factor
Demand 50 kW
Energy 31,250
kWh
Hours Use Demand (kWh/kW) 625 hr
Load Factor (HUD/Hours in 54%
Mo)
Billing Demand, Rate per Energy
Structure Definition HUD kWh
kW kWh Changes
First 200 Hours Use Demand 200 × 50 = 10,000 × $0.0800 = $800.00
Next 200 Hours Use Demand 200 × 50 = 10,000 × $0.0600 = $600.00
Next 200 Hours Use Demand 200 × 50 = 10,000 × $0.0450 = $450.00
Over 600 Hours Use Demand 25 × 50 = 1250 × $0.0350 = $43.75
Total $1893.75
Average Energy Charge per kWh $0.0606
Another common structure of energy charges are time-of-use (TOU) rates. These rates gener-
ally vary by time of day for energy consumption and are described in more detail later in the
“Dynamic Pricing” subsection.
Service Charges and Facilities Charges. The service charge is a fixed dollar amount charged by
the utility, representing some or all of the fixed costs associated with providing electric service and
producing a bill. Utilities call this component of the bill various names, including but not limited
to customer charge or delivery charge. The charge is usually expressed in dollars per month or
dollars per day of service. Changes in electricity consumption levels or patterns will not affect this
component of the bill.
If a utility must install additional or special facilities to serve a building site or run a line in
excess of a standard defined in a line extension policy, the utility will require payment by the cus-
tomer to help recover these costs. The payment usually takes the form of either a one-time contri-
bution in aid of construction or through computation of a contractually defined monthly facility
charge. The facility charge is often a fixed dollar amount as well and may be in place for a fixed
number of months and would be in addition to the service charge.
Rate Riders. Another important component of the electric bill that building professionals
should understand are rate riders. All electric accounts are billed under a standard rate tariff that
defines the service, energy, and demand charges. Furthermore, the tariff will define applicability
provisions, how billing demands are computed, minimum bill provisions, and if there are rate rid-
ers applicable to customers on that tariff. Rate riders are additional charges defined in separate
rider tariff sheets. Riders are used frequently by utilities whose rates are regulated by state agen-
cies. The reason is that submitting a filing to request approval for rate changes is time consuming
and expensive, as such request triggers a formal hearing process. Therefore, it becomes economi-
cal for utilities to seek approval for various riders designed to recover specific costs that are likely
to fluctuate. If the utility can get approval for a formula that computes the amount of the charge,
then when costs that are recovered by that rider change over time, the utility can adjust the factor
without seeking regulatory approval. Rate riders can be plentiful and can be applied in several
ways. Riders might be a sales tax applied to all or a portion of the bill amount, an energy-based
charge, a demand-based charge, or even a percent of a limited number of components of the bill.
As an example of the number and nature of riders a utility might use, Duke Energy Indiana
(2019) currently has the following riders in place:
• Fuel Cost Adjustment,

• Integrated Coal Gasification Combined Cycle Generating Facility Revenue Adjustment,
• Environmental Compliance Investment Adjustment,
• SO2, NOx, and Hg Emmission Allowance Adjustment,
• Transmission and Distribution Infrastructure Improvement Cost Rate Adjustment,
• Energy Efficiency Revenue Adjustment,
• Credits to Remove Annual Amortization of Cinergy Merger Costs,
• Midcontinent ISO Management Cost and Revenue Adjustment,
• Reliability Adjustment,
• Environmental Compliance Operating Cost Adjustment,
• Federally Mandated Cost Rate Adjustment, and
• Renewable Energy Project Revenue Adjustment.
A very common rider that is used by many utilities, whether regulated, is one that accounts for
changes in purchased power costs or fuel costs over time (e.g., the first rider in the preceding list,
called a Fuel Cost Adjustment for Duke Energy Indiana). The rider has a lot of names with some
common ones including Fuel Factor, Fuel Cost Adjustment Factor, Power Cost Adjustment Fac-
tor, and Wholesale Power Cost Adjustment Factor. The factor might be revised as frequently as
monthly. It is typically billed based on energy consumption. For some utilities, the tariff for the
power cost adjustment factor is a formula. In that case, a building professional may have to con-
tact the utility to get the current and recent factors that were applied to bills.
The standard rate tariff will reference the riders that are applicable to a customer on that rate,
so building professionals should carefully read the standard tariff and investigate and understand
all riders applicable to their bill to fully understand how smart grid benefits can be achieved. As an
example, if a facility is investigating adding rooftop solar, the bill savings would include reduced
energy charges from the standard tariff and for any riders that are based on energy plus any riders
that represent a percent of the bill.
3.3.2 Dynamic Pricing

In a general sense, dynamic pricing is the concept of businesses setting prices for goods and ser-
vices that are flexible based on market demand at the time of consumption. Many electric utilities
offer one or more dynamic pricing rates for commercial and industrial customers. Often, the rates
are optional, therefore it is important to understand the basic concepts of the rate being offered.
This section will briefly review various dynamic pricing rate options that may be available to a cer-
tain building. When trying to identify sources of value for smart grid components, it is important
to evaluate all rate options available to the customer and to consider how smart grid deployment
might allow for taking advantage of rate incentives under dynamic pricing alternatives. For more
information on these rate alternatives, visit https://www.smartgrid.gov/recovery_act/
time_based_rate_programs.html.
Time-Of-Use Rates. Time-of-use (TOU) rates have energy and/or demand charges that vary
based on the time of day. TOU rates often have two or three different charges, defined as on-
peak, shoulder, and off-peak charges (or just on-peak and off-peak). The rates are designed to
provide a high level signal as to the cost of providing power by indicating certain on-peak hours
are more costly for the utility. Typically, the off-peak rate would be lower than a non-TOU rate
charge, so a customer that can reduce energy usage during on-peak hours can often achieve bill
savings relative to a standard electric rate. TOU rates are widely offered by utilities, with some
being optional and others mandatory.
TOU rates are also sometimes targeted to specific end uses. One example relevant to smart
grid initiatives is a TOU rate for electric vehicles. Such rate designs are becoming more popular,
with price incentives to encourage users to charge vehicles overnight when the cost of power is
typically at its lowest. Electric vehicle TOU rates are most likely to be of benefit to residential
consumers rather than commercial consumers, as the rates encourage overnight charging. How-
ever, a building owner or operator with electric vehicle components should still assess whether the
utility serving the building has a TOU rate and whether benefits could be accrued through the
rate.
Table 3.3 Example TOU Rate

Time-of-Use Rate Example
Customer charge $25.00 per month
Summer Energy (May–October)
On-Peak Energy: Weekdays, 2:00 p.m. to 9:00 p.m. $0.1350 per kWh
Off-Peak Energy: All other hours $0.0575 per kWh
Winter Energy (November–April)
On-Peak Energy: Weekdays, 7:00 a.m. to 9:00 a.m. and $0.1200 per kWh
8:00 p.m. to 10:00 p.m.
Critical Peak Pricing Rate. A critical peak pricing (CPP) rate is often similar to a TOU rate in
that it has on-peak and off-peak windows and charges. Though, an additional feature of a CPP
rate is that for certain critical peak days, which are identified by the utility, the price of electricity
for a select few hours will be significantly higher than the on-peak rate. This is meant to represent
the fact that peak demand is a source of high cost for electric utilities, and the CPP rate design
passes that price signal through to the customer. If a customer consumes energy during a critical
peak event, their power bill will be high. However, the rate is also typically designed to allow a
customer to save on total power cost if the customer is able to reduce load during critical peak
events. A key feature of CPP rates that a building operator should fully understand is the means
by which a utility will communicate peak events and how much notice the utility will give. For
instance, a program might be designed such that the utility provides day-ahead notice via text
and/or email. Whereas the amount of notice might be a limitation for accruing smart grid bene-
fits (see Chapter 7), automated demand response (ADR) systems can improve a facility’s ability to
respond with short notice (see Chapter 4 and Chapter 8).
Critical Peak Rebate. A critical peak rebate (CPR) rate structure, also called a peak time rebate
(PTR) by some utilities, is similar to a CPP rate but rather than the utility charging a very high
price for energy during critical peak hours, the customer is charged the same rate during those
peak hours but can receive a discount or rebate on their bill if they lowered energy during the peak
hours. The amount of energy reduction to which the discount applies has to be estimated by the
utility, with various statistical methods used. The utility computes what is often called a baseline,
which represents the expectation of what the customer would have used during those hours had
they not reduced their consumption given recent actual energy usage information, weather on the
peak day, and other possible variables. The discount is then computed by subtracting actual
energy usage during peak hours from the baseline consumption. Building operators and owners
should fully understand the means and methods of how their utility will compute the baseline to
fully know how to achieve maximum benefit under a CPR rate structure.
Real-Time Pricing. Real-time pricing (RTP) tariffs are electricity rates that vary hour-by-hour
and are meant to represent the marginal cost to serve electricity to the consumer. Buildings with
operational flexibility or with automated controls and smart components might benefit under an
RTP rate approach if one is offered by the electricity provider. However, given the highly variable
nature of the prices, it often takes a trained, dedicated employee or third party service provider to
maximize the benefits under an RTP rate (Lazar and Gonzalez 2015). The timing of when an
operator will know the real time prices is an important consideration in a building’s capability to
achieve benefits. The timing can vary from as much as day-ahead notification to as short as an
hour-ahead notification. The timing of notifications and other possible constraints on a facility’s
ability to accrue smart grid benefits is discussed more fully in Chapter 7.
Table 3.4 CPP Rate Example

Critical Peak Pricing Rate Example
Customer Charge $50.00 per month
Energy Charges:
On-Peak Energy: Weekdays, 2:00 p.m. to 9:00 p.m. $0.1100 per kWh
Critical Peak Periods: 4:00 p.m. to 7:00 p.m. on critical peak days $1.1500 per kWh
In some RTP designs, only a portion of the customer load in any hour is subject to the real-
time prices. In such cases, there is some agreed upon or defined amount of energy in every hour
that is subject to some other rate, while energy above that defined baseline is charged at the real-
time rate. Conversely, such a construct also allows the building to earn a rebate at the real-time
price if energy in an hour is below the baseline amount.
Interruptible and Curtailment Rates. There are a variety of rate options offered by utilities
that provide an incentive for customers to reduce their demand during certain peak hours. These
rate designs fall under the family of interruptible or curtailment rate structures. Often, the amount
of demand reduction that can be provided by the customer is contractually assigned (the inter-
ruptible portion of the load, with the remaining amount deemed fixed or firm), and there can be
penalties for not reducing load by the contractual amount when called upon to do so or incentives
through rebates for reducing load. Building owners and designers should be aware of potential
interruptible rate tariffs available to them by their utility as they consider smart grid investments,
as some components of the smart grid may enable the capability to interrupt demand and earn
power cost savings by participation in the rate.
3.3.3 Rates for Distributed Generation

Electric utilities often have special rates and requirements for a customer that owns on-site
generators, especially if there is a chance the generator will generate more electricity that can be
consumed on-site and will therefore result in feeding energy back onto the grid. Such a situation
can result in different energy transactions, in which the utility and the building may be buying
and selling energy between themselves. Generally, the rate options a utility might offer to account
for such energy transactions include qualifying facility, net metering, net billing, feed-in tariff,
and value of solar. Furthermore, utilities will often require the facility installing the generator to
pay all interconnection costs. Chapter 4 discusses interconnection requirements in more detail.
Qualifying Facility. Since the 1978 implementation of the Public Utilities Regulatory Policies
Act (PURPA), utilities have been obligated to purchase at the utility’s avoided cost the electricity
produced by qualifying facilities (QF), which can be either cogenerators or small power producers.
For a regulated utility, the avoided cost is usually determined in a proceeding before a regulatory
body. For a nonregulated utility, avoided costs should be calculated consistent with regulatory
requirements. Methods to determine avoided costs are not consistent across states. The payment
is applied to the amount of energy, and sometimes capacity, delivered to the utility, where the
delivered amounts may be reduced by the customer’s load. A utility may require a customer to reg-
ister as a QF with FERC, which can be done through a self-certification process or by filing a
form with FERC for approval. (For further information about registering, visit https://
www.ferc.gov/industries/electric/gen-info/qual-fac/obtain.asp).
Net Metering. In a net metering arrangement, the net energy produced or consumed by the
building is either purchased from or sold to the utility. Net metering rules vary widely among util-
ities and state and local policies. These differences mean the benefits of net metering can vary
greatly for owners of distributed generation. In many net metering situations, all of the power
produced by the on-site generator is consumed by the building with no or very little excess energy
being delivered to the utility’s distribution grid. Figure 3.3 shows two different metering alterna-
tives for distributed generation
For net metering applications, the

utility can measure the energy
with generally one of three meth-
ods:
1. One meter, which is bidirec-

tional, meaning that it runs for-
ward when the utility is selling
energy to the building and runs
backward when the customer is
providing energy to the utility;
2. One meter that has two sepa-
rate registers to measure both the
inflow and outflow of energy,
which can then be netted;
3. Two meters, one to measure
energy delivered to the customer
and the other to measure energy
Figure 3.3 Metering alternatives for distributed generation
provided by the customer to the
energy transaction accounting.
utility.
With any of the metering approaches, the building is billed or credited for the total net energy
over the course of the month based on the rate established by the utility. If the amount delivered
to the customer by the utility is greater, then the difference is billed under the utility’s retail rate. If
the amount delivered to the utility by the building is greater, then the difference is either pur-
chased by the utility or credited to the customer.
Two examples where the customer has installed rooftop solar generation are provided in
Table 3.5. When reviewing the examples it is important to remember that when the meter is
located between the facility and the utility, the meter is reading the customer’s load as it may be
reduced by the generation. In the first example, the amount purchased by the customer from the
utility over the course of the month is 1750 kWh and the amount delivered by the customer to the
Table 3.5 Net Metering Examples

Assumptions Example 1 Example 2
Energy purchased from utility 1750 kWh 4000
Energy delivered to utility 2500 kWh 2500
Retail energy rates $0.12 per kWh $0.12 per kWh
Purchase rate $0.08 per kWh $0.08 per kWh
Net Metering Bill
kWh Rate Bill kWh Rate Bill
Purchased from utility 1750 4000
Delivered to utility 2500 2500
Net charge/(credit) to customer (750) $0.08 ($60.00) 1500 $0.12 $180.00

utility is 2500 kWh. With net metering, these two amounts are netted together. In this case, the
customer is a net seller of 750 kWh to the utility. In many cases, the utility simply rolls this excess
energy to the next month. In some cases, utilities pay customers on a monthly basis for the excess
energy. If the payment is not made monthly, then typically the payment is made at year-end. At
the time the utility makes a payment to the customer, the applicable rate for this circumstance,
i.e., the purchase rate of 8 cents/kWh is multiplied by the energy delivered to the utility.
In the second example, which occurs in a different month than the first example, the amount
purchased by the same customer from the utility is 4000 kWh and the amount delivered by the
customer to the utility is 2500 kWh. In this case, the customer is a net purchaser of 1500 kWh.
The utility charges the customer for the net amount of 1500 kWh at the applicable retail rate.
Utilities typically use their standard retail rates. In this case, the energy charge in the standard
rate is assumed to be 12 cents/kWh. Figure 3.4 provides a graphical representation of load and
generation patterns for a net metering example.
Net Billing. There is a simi-
lar concept to net metering that
is commonly referred to as net
billing. With net billing, the
amount of energy delivered to
the customer is billed under the
utility’s retail rate, and the
amount of energy delivered to
the utility is purchased or cred-
ited to the customer using the
utility’s purchase rate. Then, the
two billing amounts are netted
against each other to determine
the final billing. Two examples
using the same assumptions are Figure 3.4 Net metering load example.
provided in Table 3.6.
Table 3.6 Net Billing Examples

Assumptions Example 1 Example 2
Energy purchased from utility 1750 kWh 000
Energy delivered to utility 2500 kWh 2500
Retail energy rates $0.12 per kWh $0.12 per
kWh
Purchase rate $0.08 per kWh $0.08 per
kWh
Net Metering Bill
kWh Rate Bill kWh Rate Bill
Purchased from utility 1750 $0.12 $210.00 4000 $0.12 $480.00
Delivered to utility 2500 $0.08 ($200.00) 2500 $0.08 ($200.00)
Net charge/(credit) to customer (750) $10.00 1500 $280.00

In the first example, the 1750 kWh of energy purchased is multiplied by the retail rate of
12 cents/kWh. The 2500 kWh of energy delivered to the utility is multiplied by the purchase rate of
8 cents/kWh. In this example, this results in a bill to the customer of $10 as opposed to a credit of
$60 under the net metering example (see Table 3.5).
In the second example, the 4000 kWh of energy purchased is multiplied by the retail rate of 12
cents/kWh. The 2500 kWh of energy delivered to the utility is multiplied by the purchase rate of 8
cents/kWh. In this example, this results in a charge to the customer of $280.
Feed-In Tariff. Another option for the energy transaction with the generation-owning customer
is the feed-in tariff, a policy mechanism used to encourage deployment of renewable electricity tech-
nologies. Feed-in tariffs have been successful in facilitating the development of renewable energy
projects in Europe, but the concept has much more limited implementation in the U.S. Feed-in tar-
iff policies typically include guaranteed access to the transmission or distribution system, long-term
purchase agreements (such as 15 to 20 years), and payment levels based on the costs of generation
and a target rate of return for the generation owner.
Value of Solar Tariff. A value of solar tariff program establishes a transaction between the utility
and the self-generating customer. Although the title alludes to ownership of solar generators only,
value of service tariffs for other sources of generation might also be conceived. Use of this approach
in the electric industry is currently very limited. The value of solar rate paid to the building is devel-
oped by determining the categories and values in which solar provides both benefit and cost to the
utility (and possibly society) and combining these components into a single purchase rate.
There are several ways to design the transaction. The design used by Austin Energy (www.austi-
nenergy.com), the first utility to deploy the approach, can be characterized as “buy-all, sell-all” trans-
action in which the customer buys all of their electricity requirements at the applicable retail rate and
sells all of their generation to the utility at the value of solar rate. In other words, the purchase of
electricity for use on-site is completely decoupled from the sale of the generation to the utility.
Table 3.7 provides a summary of rate options typically used by electric utilities for distributed
generation applications.
Table 3.7 Overview of Rate Options for Distributed Generation
Rate Option Overall Approach Value Provided to DER Industry Use of
Customer Method
Qualifying facility (QF) Energy provided by cogenerators Avoided cost of utility, varies Limited for small
and small power producers, using widely across industry. Energy distributed energy
renewable energy sources, is sold to utility may be net of QF’s resource (DER)
compensated at utility’s avoided cost load
Net metering Customer’s generation avoided retail Avoided retail electricity Long-standing and
purchase of electricity and any excess purchases, credit for excess widespread
kWh is credited/purchased by utility energy, timing differences—
excess energy from one period
off-set purchases during another
period
Net billing Customer’s generation avoids retail Similar to net metering but Limited
purchase of electricity and any excess lower since retail prices normally
is settled at difference between retail exceed credit/payment to
sales price and excess energy customer
purchase price
Feed-in tariff Customer is paid for generation at The targeted rate of return Very limited
price that achieves a target rate of
return for customer
Value of solar (“value All generated energy is purchased/ Purchased/credited energy Very limited
tariff”) credited by utility. All customer load
is purchased at retail price
3.4 OTHER POSSIBLE SOURCES OF SMART GRID BENEFITS

• This section introduces sources of benefits for smart grid components other than utility
programs and utility rate sources.
There are also sources of benefits a building designer, owner, or operator can enjoy by owning
and operating smart grid components that are not necessarily sourced from electric utilities. The
following sections introduce those possible sources of benefit.
3.4.1 Demand Response Aggregators

In certain wholesale markets, the ability of an individual building or electric consumer to par-
ticipate in the wholesale demand response market may be restricted or limited by minimum
demand reduction requirements or administrative burdens associated with participation. There-
fore, there are third party entities separate from electric utilities that contract with retail customers
who are interested in offering that demand reduction. Those third parties aggregate the demand
reductions of several facilities and submit that aggregated reduction into the market. Such aggre-
gators represent another possible source of value for a building deploying smart grid technology.
Aggregators may also be called demand response providers, curtailment service providers, or
aggregators of retail customers.
Many large and sophisticated utility customers, such as industrial facilities or high-rise office
buildings, may choose to enroll directly in demand response programs, allowing them to collect all
of the available revenue. However, there are a number of reasons why it might be advantageous for
a customer to enroll through an aggregator:
• An aggregator will have the technical skill and ability to design, implement, and operate a
demand response system more quickly and cost effectively than many utility customers would
be capable of. This ability for a customer to share/reduce its transaction costs and
administrative personnel for participating in the program by using an aggregator may be
necessary for economic feasibility.
• Smaller buildings or buildings only able to shed smaller loads may not be eligible to enroll
directly with the utility; working with an aggregator combines their load with others to enable
all to enroll collectively.
• Some demand response programs include mandatory events for which nonparticipation may
result in penalties. Demand response aggregators spread the risk of noncompliance across
multiple buildings, and will take responsibility for nonparticipation due to technical or
operational problems outside the control of the building operator.
• Many demand response programs require commitment to fixed levels of load shedding per
season. Aggregators with large portfolios would have the ability to bid a fixed amount per
season, and allow individual buildings within their portfolio to shift their commitment as
necessary.
For operators and owners of multiple buildings, working with a demand response aggregator can
allow demand response strategies to be unified across a portfolio. When considering development or
improvement of a campus or portfolio of buildings, the design team should reach out to demand
response aggregators operating in their specific utility market. A list of approved aggregators can usu-
ally be identified by contacting the local electric utility, the state public utility commission, or the
regional grid operator (RTO or ISO).
When specifying communication and control equipment for the project, a possible requirement
might be compatibility with the OpenADR protocol. See Section 8.3.1 for further details on
OpenADR.
In some cases, if the group of buildings will have sufficient load and load shedding opportunities,
the building operators may be able to enroll in demand response programs directly, without the assis-
tance of an aggregator. In this case, many of the same recommendations would apply.
3.4.2 Grid Services, Ancillary Services, and Power Quality

Management
Certain smart grid equipment has the capability to provide value with respect to reactive
power production and power quality. For instance, advanced inverters can help supply reactive
power. (See Section 4.7 for further information on advanced inverters). Reactive power can gener-
ate benefit either by improving power factor at the site and thereby avoiding power factor penal-
ties, or in some instances, the utility may provide a financial benefit for the customer’s willingness
to provide reactive power to the grid. Such grid interactions may be discussed by utilities under
“grid services” or “ancillary services” nomenclature. Smart grid components can also act as local
voltage regulation, improving power quality at the site by regulating voltage swings. This is espe-
cially important for facilities with specialized equipment or processes that require highly regulated
voltages. Examples of applications that may benefit from such voltage regulation are hospitals
with specialized equipment, or manufacturing processes with sensitive equipment where a large
voltage drop can force production shut downs. When considering smart grid investment, a build-
ing professional should research and understand whether their investment can provide these ben-
efits. In general, such benefits would generally be greater for loads that are larger and with higher
load factors.
3.4.3 Fuel Switching

In some cases, converting to smart grid components may result in switching fuel sources for
certain equipment. A good example is replacing gas-fired heating equipment with thermal storage
heating equipment. The new equipment now uses electricity as the source of space heating. In
those cases, it is important to recognize the value that fuel switching might provide by assessing
the relative costs to achieve the same function but with the two fuel sources. Furthermore, some
fuel-switching decisions may generate a societal benefit in that the new equipment contributes
less greenhouse gases to the environment that the legacy fuel.
3.4.4 Transactive Energy and Future Opportunities

Transactive energy is “a system of economic and control mechanisms that allows the
dynamic balance of supply and demand across the entire electrical infrastructure using value
as a key operational parameter” (NIST 2017). Although not fully operational in current elec-
tric markets, the potential for a more dynamic grid based on transactive markets using smart
infrastructure is a future possibility. In such a future, smart grid components will be situated
to take advantage of dynamic pricing models and transactive energy markets to achieve bene-
fits for the electricity customer deploying the smart infrastructure.
3.4.5 Increasing Rental Rate and Value of Property

Smart buildings and Leadership in Energy and Environmental Design® (LEED®) certi-
fied buildings may also benefit from having increased property value and higher lease rates,
which can be attractive to building owners in a tightly competitive market (Moriarity 2018;
Lam 2017). Although hard to quantify, the U.S. Green Building Council claims that LEED
certified buildings have faster lease-up rates than non-LEED buildings (Knox 2015).
3.5 VALUE STACKING

• This section is a reminder that multiple benefits might be “stacked” and accumulated
to create an overall economic case in support of smart grid investment.
It should be kept in mind that, when evaluating benefits of smart grid, any individual
source of benefit from any single smart grid component may not in and of itself be sufficient
to support the cost of the smart grid systems in a building. Therefore, all sources of value that
can be generated from smart grid deployment, including equipment and operation/behavioral
sources (such as peak load management strategies) should be evaluated. Stacking up value-
added approaches can generate cumulative benefits that create cost effective smart grid solu-
tions. Such value stacking analysis can help a building designer, owner, or operator under-
stand the full array of costs and benefits associated with smart grid systems.
3.6 FINDING INFORMATION ON SMART-GRID-RELATED PROGRAMS IN

YOUR AREA
• Identifying how a building professional might go about identifying the various potential
sources of benefits is useful.
• Learning how a buildings professional identifies the various sources of benefits is a nec-
essary skill.
3.6.1 Local Utility Programs

The local utility is the first place to start for understanding what utility programs and rates are
available in your area. In many parts of the country, only one utility is available for a given site. In
other parts, multiple options are available (see Section 2.2 for additional details). Utility websites
often have information about DSM programs and rates, but the information may be outdated or
provide an incomplete picture of available options. Instead, contacting a utility customer service or
key accounts representative will be more informative. Some important questions to ask include
the following:
• Does the utility offer demand response programs?

• Does the utility offer dynamic pricing programs?
• What are the rules for integrating renewable resources?
• What are the rules for interconnecting distributed generation and electrical storage to the
grid?
• What are the rules for microgrids and islanded operations?
Utilities may have size limitations, such as only working with customers who are larger or
smaller than a certain size. If that is the case, then using demand response aggregators may be
necessary. Beyond contacting the local utility, the following subsections provide further resources.
3.6.2 Demand Response Programs by State

DOE is planning to provide an information clearinghouse for demand response programs in
the U.S. that are suitable for federal, commercial, and industrial customers. The information is
available at https://www.energy.gov/eere/femp/incentives-and-demand-response-programs.
3.6.3 Wholesale Market Programs

Wholesale demand response market programs are operated by ISOs and RTOs in the U.S.
With the exception of ERCOT, these programs are regulated by FERC. Programs in the
ERCOT region are regulated by the Public Utilities Commission of Texas. Key websites for each
of the ISOs and RTOs are shown in Table 3.8.
Table 3.8 U.S. ISO/RTO Wholesale Demand Response Websites

ISO/RTO URL
California Independent System Operator http://www.caiso.com/participate/Pages/Load/Default.aspx
Electric Reliability Council of Texas http://www.ercot.com/services/programs/load/
Midcontinent Independent System https://www.misoenergy.org/markets-and-operations/#nt=/
Operator marketsandopstype:Demand%20Response
ISO New England https://www.iso-ne.com/markets-operations/markets/demand-
resources/
New York Independent System Operator https://www.nyiso.com/demand-response
PJM Interconnect https://www.pjm.com/markets-and-operations/demand-
response.aspx
Southwest Power Pool “No load-reduction demand response activity has occurred in the
Integrated Marketplace since it was established on March 1, 2014”
(FERC 2018a).
DEPLOYING SMART GRID
TECHNOLOGIES—
Distributed Energy Resources
Distributed energy resources (DERs) are electricity-producing resources, energy storage, or
controllable loads that are directly connected to a power distribution system or a facility served by
the local distribution system. DERs are an important group of smart grid technologies and pro-
grams that are available to building designers and operators. Therefore, it is important to under-
stand the various technologies available and their operating characteristics when planning smart
grid integration for a building or set of buildings. This chapter defines DER in terms most appli-
cable to this guide, then provides an overview of various DER technologies that are currently
commercially available, with some discussion on the design and operation considerations of each.
A key element of DERs is their capability to provide demand management opportunities, which
will also be described in this chapter.
4.1 DEFINING DISTRIBUTED ENERGY RESOURCES
• This section defines DER, which helps in understanding the following sections.
Defining DER is difficult since the associated technologies are continuously evolving, and
new technologies are constantly being developed. Historically, DER included small, dispersed
generation sources that were connected directly to the distribution system. More recently, this
definition has expanded to also include energy storage, energy efficiency, and demand response on
the power distribution system or in the premises of a facility served by the distribution system.
FERC defines DER as “a source or sink of power that is located on the distribution system,
any subsystem thereof, or behind a customer meter. These resources may include, but are not lim-
ited to, electric storage resources, distributed generation, thermal storage, and electric vehicles and
their supply equipment” (FERC 2018b). For the purposes of this guide, this chapter focuses on
those DERs, including demand response, that are connected behind a building’s electric meter
and are likely to be designed or operated by building professionals. Note that some organizations
in the grid space do not explicitly include demand response as a subset of DER (such as North
American Electric Reliability Corporation [NERC]), or explicitly exclude it (such as the Institute
of Electrical and Electronics Engineers [IEEE]). Thus, in conversations about the smart grid, it is
important to clarify upfront the specifics of what is being discussed.
43
44 | Distributed Energy Resources
4.2 UTILITY REQUIREMENTS AND CONSTRAINTS

• Interconnection is the connection of DER with the grid. In order to interconnect DER
with the grid, building professionals must work through the local utility.
• Understanding the fundamental components of a utility's interconnection process will
help building professionals in navigating it.
• The three components of DER interconnection are the process, technical require-
ments, and utility rates.
DER interacts with the local electric grid by reducing the building’s load on the power system,
exporting power when production exceeds building demand, and potentially affecting local power
quality. This interaction is often referred to as interconnection. An electric utility therefore has a
vested interest in ensuring that DERs are designed, installed, and commissioned properly. Each
state and utility will have varying requirements and procedures. As a first step, building profes-
sionals should find interconnection information on the utility’s website or contact their utility as
early as possible. The utility will provide relevant information on requirements, analyses, and
approvals needed, and help walk them through the interconnection process. The following section
summarizes the general aspects of the process and key questions that should be asked and under-
stood.
There are three main components to DER interconnection: process, technical requirements,
and rates.
4.2.1 Process
The process for DER interconnection in many states follows FERC’s Small Generation Inter-
connection Procedure (FERC 2016). This procedure, applicable to most building-scale DERs,
outlines the process’ steps and associated timelines. The first step is to submit an application form.
Utilities will likely have a standard DER interconnection form, and a single point of contact for
answering questions. The information provided on the application will include project contact
and location, meter number, and DER type and capacity. From the information provided in the
application, the utility will determine the extent to which further engineering review or distribu-
tion system studies are required and perform them as necessary. Additional information that may
be required throughout the process are one-line schematic diagrams, control schematics, and site
plans. Once the DER is approved, the utility will witness or verify the DER system testing and a
standard interconnection agreement will be signed. It is also important to note that building staff
should notify the utility of any subsequent changes to the DER.
There are fees associated with the application and for any needed engineering reviews or dis-
tribution system studies. These fees vary by utility and DER capacity. Utilities often require that
the building owner carry liability insurance. The minimum amount of liability insurance also var-
ies but usually ranges from several hundred thousand to several million dollars.
4.2.2 Technical Requirements

The DER technical requirements also vary by utility, but the majority refer to one or both of
the following standards:
• IEEE 1547, Uniform Standard for the Interconnection and Interoperability of Distributed
Energy Resources with Electrical Power Systems Interfaces (IEEE 2018). This standard
outlines the technical specifications of interconnecting DERs to the grid, defining how
interconnected DERs should behave when connected to the grid under specific
circumstances. The 2018 update to this standard reduced significant barriers to several DER
capabilities, such as grid support and interoperability. These updates included specifying that
DERs and associated inverters:
• Shall be capable of actively regulating voltage,

• Shall be capable of riding through abnormal voltage or frequency,
• Shall be capable of frequency response, and
• May provide inertial response by modulating active power in proportion to the rate of
change of frequency.
The update also allows for intentional islanding. It will take time for states to adopt the
newer version but building professionals should understand the update and plan accordingly. For
example, building owners and designers should define whether they want DERs to supply power
during grid outages, and work with their vendors and utility to implement this capability.
• UL 1741 SA, Supplement for Grid Support Utility Interactive Inverters (UL 2016). This is an
interim supplement to the full UL 1741 standard, which outlines test protocols for DERs
based on an external Source Requirements Document. This standard describes the technical
capabilities that specific DER hardware components should have to interconnect with the
grid. Utilities likely require that DER equipment is UL Listed or CSA certified to meet this
standard. Like the 2018 update to IEEE 1547, this supplement enables increased DER
implementation by allowing them to support grid stabilization through modulating their
output and other performance properties. Prior to this supplement, the standard instead
required expedient disconnection during grid disturbances.
Ongoing updates to IEEE 1547 and UL 1741 will continue to address the evolving nature of
DER. Some additional design considerations for DER interconnection follow. Note that these
considerations are general and will vary for a given utility:
• Provide protective devices to interrupt current if fault or dangerous event occurs on the grid
• Provide circuit breakers on the building side of the connection to interrupt the maximum
available fault current
• Provide a labeled interconnection disconnect switch
• Install an equipment ground conductor in addition to ungrounded conductors
• Maintain specified power factors
• Do not create voltage or current disturbances
• Ensure the DER is synchronized with the grid
• Provide automatic interrupting devices for fault current
• Provide test switches for protective functions
• Provide power transformer to isolate DER from other customers as necessary
• Provide anti-islanding equipment
• Provide ground fault protection
There may be additional communication requirements, which would allow the utility to mon-
itor and potentially control the DER to ensure grid stability. This is discussed in more detail in
Section 4.7.
4.2.3 Rates
Utilities have specific tariffs or rates for facilities with DERs. These rates govern how the
facility both pays for electricity provided by the grid and is compensated for grid services provided
by the DER. Section 3.3 provides more detail. When designing DERs, it is important to consider
the following:
• Whether the DER qualifies for net metering. This is often met by meeting the PURPA’s
definition of a qualifying facility. Typically, this includes renewable energy and high efficiency
cogeneration equipment. Electrical storage may not qualify if the controls are set up to charge
from the grid. It is important therefore to understand how electrical storage is treated under a
given rate structure.
• Whether a DER necessitates a standby rate. Standby rates are often applied to generators,
including fuel cells, that are designed to run in parallel with the grid. These rates include fees
associated with the cost to the utility of being capable of picking up the load should the
generator disconnect.
• The circumstances under which the DER will receive retail versus wholesale rates for
electricity exported to the grid. This includes where there is a maximum power above which
the DER production will receive the wholesale rate. It also includes the period over which net
production is calculated. If net production is calculated monthly versus annually, this will
affect the economics of the DER.
4.3 DEMAND MANAGEMENT

• The technical management of the loads and DERs in the building is critical to a build-
ing's interaction with the smart grid; this section describes the types of demand man-
agement and how they work in practice.
• Considerations for building design are also provided.
A primary goal of the smart grid is to manage the electrical load of buildings and their end
uses to better align with the needs of the electrical grid. Buildings will shift more of their load to
times when more, cleaner power is available, and prices will shift to make this strategy the lowest
cost option for building owners. This will mutually benefit both the building and the grid. Histor-
ically, utilities and grid operators communicated the needs of the electrical grid to buildings
through static price signals (e.g., time-of-use (TOU) rates) and depended on manual intervention
by the building manager; the smart grid will enable much more dynamic, direct connection to
enable the building to manage demand. As Chapter 3 discusses, buildings may gain significant
financial benefit for participating.
These new methods of connection between grid and building include direct configurations (Fig-
ure 4.1) and indirect configurations (Figure 4.2) that use an aggregator firm as an intermediary.
These connections also dif-

fer somewhat depending on
where the communication occurs
with the demand side. Some-
times the connection is central-
ized across the building,
generally through a building-
wide automation system. Some-
times the connection occurs with
individual building systems or
even equipment; an example of
this approach would be commu-
nication directly to a rooftop
unit. This difference is explored
in more detail in Chapter 8.
In addition to different
methods of connecting with the
smart grid, there are a few differ- Figure 4.1 Direct method of automated demand response.
ent general types of demand
management to plan for:
1. Demand response (i.e.,
load shed). At times when
there is a significant
shortage of electric capac-
ity in a given area, a grid
operator may send a sig-
nal to certain large cus-
tomers to significantly
reduce electric demand
just at that point in time.
This often only happens a
few times per year when
the grid is most strained;
these are called demand
response (DR) events. The
smart grid could be used
to more quickly and easily
communicate such
events, improving the
response from buildings.
Capabilities are also Figure 4.2 Indirect method of automating demand response
emerging that allow for with an aggregator firm acting as an
more automated commu- intermediary.
nication between utility
and buildings. Protocols like OpenADR allow for utilities to make DR requests of build-
ings and have the building respond in an automated fashion, without a human necessarily
being in the loop. This can be used for control of both building systems and DERs. This
differs from direct load control by the utility (historically used with electric water heaters,
for example), which is also an option but not favored by most building owners. Regardless
of the method, customers are paid an agreed-upon rate for their ability to participate in
these “events.”
2. Demand limiting. With this method, buildings are focused on controlling their systems to
limit load to some maximum amount during a peak time period (usually a few hours in the
afternoon) to avoid demand or ratchet charges. For example, they may do so by strategi-
cally cycling cooling units. In Figure 4.3, demand limiting has the same shape as load
shed, but the mechanisms causing the shape change are different.
3. Load shift (sometimes referred to as load shaping). Load shifting uses some methods such as
thermal storage or thermal mass to shift a load throughout the day, often from the after-
noon to the middle of the night. Shifting is often done in response to TOU electric rates,
real time pricing, or even capacity bidding. See Figure 4.3.
4. Modulate load (i.e., ancillary services). Quicker demand management techniques may also
be deployed to modulate load over seconds, providing ancillary services such as frequency
regulation and voltage support. See Figure 4.3.
4.3.1 Design Considerations
To ensure full capability for managing demand in a building, designers can include a few key
components:
• Electric service and switchgear must be designed for interaction with demand management
strategies; a fast-acting automatic transfer switch should be considered (Remington 2019).
• Real-time feedback of building electrical demand at the meter is critical. Feedback should be
near real time (less than one minute lag). Submetering at a more granular level (major HVAC
equipment, separate HVAC and lighting meters, and so on) can also substantially aid in
decision-making when the operator is trying to limit demand. Create an object for this
demand in the building automation system (BAS) to enable more functionality.
• The building operator should have access to a user interface which includes this metered data,
and could also be capable of communication with other internal and external systems, such as:
• The BAS. This can include more than just HVAC; lighting and other controls can
often be integrated. The BACnet® protocol (see Section 8.3.2) can be used to connect
different systems from different manufacturers.
Figure 4.3 Types of demand management.

Source: DOE (2019)
• If a building has access to real-time pricing (see Section 3.3.2), then the current utility
price needs to be connected as a system input for both operator consideration and
optimization calculations.
• Any information or communications from the utility (such as DR event alarms,
OpenADR communications, and day-ahead or hour-ahead price forecasts) should also
be integrated if possible.
• There are many standards and protocols both in existence and under development in the area
of demand management. Building designers should consider these standards for their building
type and ensure that fundamental building automation systems will be capable of some type of
smart grid communication. These include the OpenADR protocol for building automation
interaction with the smart grid and IEEE 2030 (IEEE 2011) for smart grid interoperability of
individual building systems. More details on these and other protocols and standards can be
found in Chapter 8.
The recommendations above are most appropriate for larger buildings. For smaller or simpler
buildings, designers should consider incorporating more capability for decentralized control of
individual equipment or systems. Many devices now come ready for cloud connectivity; some of
these may soon be capable of standard demand management communications as well.
4.3.2 Operational Considerations
Even in a typical building today with no DER, there are a number of possible value streams to
be captured through demand management, requiring operational input and even optimization.
(Chapter 3 identifies the value streams). As DER such as energy storage and on-site generation
are added, this operation becomes increasingly complex. Building operators must understand each
mechanism for capturing value, how external factors—such as utility rate structure and weather—
affect those mechanisms (see Chapter 7), and how to operate the building to maximize total
value. Operational decisions include when to dispatch on-site generation (e.g., fuel cells or gener-
ators), when to augment HVAC and lighting controls, and when to both charge and discharge
storage. These decisions require analysis of the value stream trade-offs that exceeds the scope of
this guide. Many of these strategies involve storage, either active storage (such as a battery) or
passive storage (such as overcooling a building space). This introduces trade-offs in time: using
storage now leaves less storage available later. As a result, value stacking is more complex and dif-
ficult than simply adding a few value streams together, because the streams affect each other. For
example, an operator may have to choose whether demand response is more or less valuable than
load shifting, and how both affect the usage of storage for emergency backup. Another common
example: if a storage-based strategy is over-deployed during an afternoon peak period, there may
be a “rebound” in demand following the peak period where demand spikes due to deferred cooling
or power needs; this rebound can negate the original value captured.
As these decisions become more complex there are new tools (e.g., software) being introduced
that may optimize building operation in an automated fashion, calculating in real time the best
operational decisions to maximize the multiple streams. One capability becoming available to
building operators is model-predictive control (MPC). MPC tools use modeling coupled with
building data, forecasting of weather, and other inputs to predict and provide recommendations
for the building operator to maximize DER and demand management value in the coming hours
and days. Most tools and aids for supporting building operators in these decisions are relatively
new to the market and still heavily customized. Building operators could start by speaking with
their utility regarding which value streams are available to them and which tools their utility
would recommend (or even offer as a service) to help them maximize value. In addition, utilities
with smart grid programs may use a corresponding control system on the grid side, generally
called a distributed energy resource management system (DERMS, or sometimes more basic
Supervisory Control and Data Acquisition [SCADA] systems), that aids in controlling transmis-
sion and distribution on the grid. These systems are increasingly able to provide information to
customers too, which could aid in customer-side demand management.
Regardless of which demand management mechanisms are being used, the building owner
should ensure that the control, visualization, and communication systems are working properly.
This requires commissioning of the demand management systems, with planning and functional
testing similar to that traditionally used in HVAC automation. The systems, even where automa-
tion is used, should be regularly monitored and maintained. Controls used for demand response,
peak demand limiting, and emergency backup are only used occasionally, so functional testing of
these should be a part of ongoing operations and maintenance plans.
4.4 BEHIND-THE-METER GENERATION
• There are a variety of behind-the-meter (BTM) generation technologies that allow for
reduction of a building’s electrical power purchases from the grid, and sometimes
enable exporting of electric power to the grid.
• This section covers the design and operational considerations of the most prevalent
BTM generation technologies.
• Understanding the basics of these technologies, as well as resources for more informa-
tion, allows building professionals to begin to incorporate them on their projects.
NERC defines behind-the-meter (BTM) generation as “a generating unit or multiple generat-

ing units at a single location (regardless of ownership), of any nameplate size, on the customer’s
side of the retail meter that serve all or part of the customer’s retail load with electric energy”
(NERC 2017). Sections 4.4.1 through 4.4.4 summarize four of the most prominent BTM gener-
ation technologies, focusing on their potential interaction with the smart grid. It is usually advan-
tageous to consider low-cost energy efficiency measures prior to implementing BTM generation.
The reduced electrical demand often leads to optimized BTM generation capacities and cost.
4.4.1 Photovoltaics
Photovoltaic (PV) sys-
tems are the most widely
implemented form of BTM
generation, with 2.1 GW
of new capacity installed
capacity on nonresidential
facilities in 2018 and fore-
caster to approximately
double by 2024 (SEIA
2019). PV systems convert
sunlight into electricity via
the photovoltaic effect. The Figure 4.4 Typical PV system components.
direct current created by
the PV array is typically converted to alternating current and conditioned via an inverter, as dis-
cussed in more detail in the Section 4.7. Due to the sun’s motion across the sky and cloud cover,
the output of a PV system is highly variable. Figure 4.4 illustrates the typical components of a PV
system.
These components include:
• a PV array, which converts sunlight into direct current (dc)

• mounting, which holds the PV array in place
• disconnects, which disrupt electrical connection for maintenance and repair or (for safety
reasons) during a grid outage or disturbance
• an inverter, which converts dc to alternating current (ac)
• electrical storage (optional)
• an electrical panel and meter
• a monitoring system (optional), which tracks performance for issue identification and
educational purposes
• tracking systems (optional), which moves the PV array to track sun’s path across the sky,
thereby improving production by between 24% and 38% (Smith 2011)
The primary benefits of a PV system are reduced grid-provided electricity and associated
decrease in utility bills and emissions. When coupled with electrical storage and islanding in a
microgrid arrangement, PV systems can provide increased reliability and resilience. This is out-
lined in more detail in Sections 4.5.1 and 9.2. Currently, most utility tariffs are based on energy
consumption in kilowatt-hours (kWh). This has historically meant that inverters were designed
for a single objective: to maximize electrical energy production. This paradigm is shifting with
advanced inverters. Advanced inverters are enabling increased utilization of PV by allowing cur-
tailing as opposed to disconnect, and a variety of other functionality, as outlined in more detail in
Section 4.7. Depending on local climate, PV’s ability to reduce peak demand on its own may be
inconsistent due to intermittent cloud cover. Although a PV system will likely reduce a building’s
peak demand somewhat, the extent of this impact is often overestimated and should be treated
with caution.
DOE’s Better Building Alliance’s On-Site Commercial Solar PV Decision Guide comprehen-
sively reviews PV design and operational considerations (DOE 2014c). We summarize the most
important considerations subsequently and provide additional useful resources from the Better
Building Alliance and other sources in the Bibliography section.
4.4.1.1 Design Considerations. When designing PV systems for commercial buildings, the
following considerations should be addressed.
The orientation of the solar array will affect the PV system’s production. Orienting the system
toward the south in northern latitudes and north in southern latitudes typically maximizes a fixed
arrays production. Shading from adjacent structures and trees is also particularly important and
should be minimized to the extent possible. Tools such as Solmetric’s SunEye, Wiley’s Solar
ACME Solar Site Evaluation Tool (ASSET), Solar Pathfinder, Google’s Project Sunroof, and the
University of Oregon’s Sun Path Chart Software, can assist with shading and orientation studies.
Because PV arrays with multiple rows can self-shade, the National Renewable Energy Laboratory
(NREL) suggests spacing and angling rows such that each solar panel receives full daylight at
10 a.m. on the winter solstice (Lisell et al. 2009). NREL also provides tools for designing PV
arrays: System Advisor Model and PVWatts® Calculator.
Designers should ensure that PV equipment is rated and tested for the specific applica-
tion and climate. A UL or equivalent listing is best practice. Note that actual performance
will be less than rated performance by up to 30% (ASHRAE 2016c). Overall PV array pro-
duction is dependent on the type of PV panel selected. PV systems may be mounted on the
ground surrounding a commercial building. They are also commonly mounted on a commer-
cial building’s roof. Roof-mounted systems come with a variety of structural considerations.
The National Roofing Contractors Association’s (NRCA) Guidelines for Roof-Mounted Photo-
voltaic System Installations outlines many of these considerations (NRCA 2018). If the roof
will need to be replaced during the life of the PV array, it is best to replace it prior to the PV
array’s installation. The roof manufacturer or installer should determine whether the PV
array will invalidate the roof warranty. An engineering analysis should be undertaken to
ensure that the roof can support the weight of the PV array. This weight includes not only
the PV array itself, but additional snow and wind loading as well as the weight of the instal-
lation and maintenance personnel.
There are two primary ways
to mount a PV system on a
commercial building’s roof—
ballasted racking and attached
racking (DOE n.d.a). Ballasted
racking involves heavy weights
such as concrete blocks, while
attached racking uses hardware
(Figure 4.5).
Ballasted racking is a sim- Figure 4.5 Typical PV racking systems.
pler installation with minimal
roof penetrations. However, it
is not applicable in as many jurisdictions (due to local codes) or applications as attached rack-
ing. Either system should be designed to withstand the static and dynamic loading experi-
enced by the PV array.
The space needed for the PV array will depend on the amount of electrical generation
desired, the efficiency of the modules, and any space constraints. Local building and fire
codes typically require leaving the perimeter and centerlines of the two major roof axes clear.
Similar requirements involve allowing access to any skylights, hatches, and other equipment
on the roof.
Another key factor in the design of a PV system is the amount of solar insolation (i.e.,
amount of energy from the sun) at the site, with higher insolation levels leading to higher
electricity generation. This varies depending on a site’s latitude and annual cloud cover. It is
recommended that a site receive at least 3.5 kWh/m2/day for a PV system to be considered.
Fortunately, this criterion includes most of the populated land area of the world (The World
Bank 2017).
The PV system should be installed by a licensed electrician to meet the National Fire
Protection Association (NFPA) 70®, National Electrical Code® (NEC®). Article 690, “Solar
Photovoltaic Systems” is particularly relevant. This includes requirements that the disconnect
switches be manually operable and readily accessible, as well as clearance requirements for the
inverter and other electrical panel components (NFPA 2017).
The cost of PV systems continues to decline. Industry-wide trends are published in Law-
rence Berkeley National Laboratory’s (LBNL) Tracking the Sun report (LBNL 2019b) and
the Solar Energy Industries Association’s (SEIA) U.S. Solar Market Insight™ (SEIA 2019).
However, a site-specific quote should be acquired from multiple installers. The U.S. federal
investment tax credit can help defer part of the PV system’s capital cost. In 2019, it allows for
a credit of 30% of the cost but is scheduled to be reduced to 26% in 2020, 22% in 2021 and
remain at 10% after 2022. In addition, rebates may be available through the local electric util-
ity or other state, and local credits may offset a portion of the system’s capital cost. Loans
with lower rates for PV systems may be available from local financial institutions, and expe-
dited permitting may be available from the local government for projects incorporating PV.
The local utilities rates and net metering requirements should be researched and the impact
on a building’s utility bills quantified.
If current PV system costs are too high to incorporate into a building’s initial design and
construction, it is economically advantageous to make the building solar ready. NREL’s Solar
Ready Buildings Planning Guide comprehensively overviews building design practices that
allow for easy addition of future, lower cost PV systems (Lisell et al. 2009). This involves first
understanding the local zoning laws through discussions with local officials. The next step is
to optimize the site orientation and building location to maximize the available solar
resource. Minimizing the rooftop equipment and confining it to a specific roof area will assist
in this. Thermoplastic olefin or polyolefin membranes are good materials for flat roofs, while
standing seam roofs are optimal for sloped roofs. Ensuring that the roof is structurally capa-
ble of supporting the static and dynamic loads of the PV array is critical. A good place to
document this is in the drawing set’s code sheet. Also, understand the roof warranty such that
the inclusion of a PV system will not violate it. The electric panel should be located for con-
venient connection to the solar array with amperage ratings sized for the PV system. Conduit
should also be added during construction with minimized length to reduce voltage drop.
Designate space in the electrical panel for the PV circuit breaker with adjacent space and
clearance for the inverter and balance-of-system components.
Designers should consider implementing advanced inverters on their PV projects, even
when not required by the utility. This additional functionality, discussed in more detail in
Section 4.7, supports higher penetration of PV on the grid without requiring expensive capi-
tal improvements by the utility. Many standard inverters need only a software update to use
this advanced functionality (Pless et al. 2019).
4.4.1.2.Operational Considerations. PV array performance degrades as dust, dirt, and

other materials build up. Rainfall can remove a portion of this sediment, but regular cleaning
is the only way to ensure optimal performance. Cleaning may be performed manually by a
contractor or automatically by a sprinkler system. Another key component to optimal perfor-
mance is maintenance. This should include scheduled preventative maintenance as well as
inspection of the system to identify corrective or condition-based maintenance that should be
performed. Another method of identifying issues is through a monitoring system. Although
optional, monitoring systems are a valuable tool for identifying faults early.
Regardless of the level of cleaning and maintenance, PV system output will decrease over the life of
the system on average around 0.25% per year. PV system lifetimes are typically around 25 years. How-
ever, at the end of this period the system will continue generating power and can be left in place, but
when it comes time to replace inverters on a 25-year-old PV array, it may make sense to replace some
or all of the individual panels, depending on their specific performance (DOE 2014c).
4.4.2 Gas-Fired Generation

4.4.2.1 Overview. Gas-fired BTM generation utilizes a prime mover, which is a piece of
equipment that generates electricity through fuel combustion. Figure 4.6 illustrates the typical
components of a gas-fired BTM generation system.
Gas-fired BTM genera-
tion has predominately been
designed and operated as
emergency-only systems,
providing electricity to facil-
ities, such as hospitals and
data centers, during grid
outages (Rowley and Kings-
ton 2019). Building profes- Figure 4.6 Typical gas-fired BTM generation components.
sionals, driven by concerns
about grid reliability follow-
ing extreme weather events, are increasingly adopting emergency-only, gas-fired BTM gener-
ation for other facility types. Gas-fired BTM generation is, therefore, more about facility
resilience than smart grid interaction. When serving life-safety or emergency power, these
systems must be capable of supplying two hours at full load and meet NFPA NEC® Article
700 (NFPA 2017) and NFPA 110 Level 1 requirements (NFPA 2019). When they are serv-
ing as legally required standby, such as supplying egress lighting, they have similar time
requirements and must meet NFPA NEC® Article 701 and NFPA 110 Level 2 requirements.
Gas-fired BTM generation may be used for nonemergency purposes, including peak
power reduction and automated demand response (ADR). Within this context they can
reduce a facility’s utility demand charges or receive utility incentives.
4.4.2.2 Design Considerations. Gas-fired BTM generation systems that are designed to
operate in nonemergency mode must meet the Environmental Protection Agency’s (EPA)
National Emission Standards for Hazardous Air Pollutants (EPA 2019).
When designing emergency-only, gas-fired BTM generation, building professionals
should consider whether there is a chance it could operate parallel to the grid in the future. If
so, it may be worthwhile to purchase equipment capable of this operation should the need
arise or the economics become more favorable. Nonemergency gas-fired BTM generation is
currently not typically designed to operate in parallel with the grid. They instead use auto-
matic transfer switches to isolate themselves from the grid during standby or demand
response operation. Under these circumstances, interconnection requirements do not apply
(Rowley and Kingston 2019).
If the system is designed to be operated in parallel with the grid, interconnection stan-
dards will apply as described in Section 4.2. Building professionals should confirm the tariff
rate they will receive for excess power generated. It is common for utilities to provide the
wholesale rate, which would negatively impact the economics of interconnecting a gas-fired
BTM generator.
4.4.2.3 Operational Considerations. Gas-fired BTM generation should be routinely
inspected with associated scheduled maintenance. If being operated as emergency backup,
functional testing is required to ensure the system operates during periods when the grid is
down. EPA’s National Emission Standards for Hazardous Air Pollutants includes compliance
monitoring, involving regular inspections and staff interviews for systems operating in none-
mergency mode (EPA 2018).
4.4.3 Combined Heat and Power
4.4.3.1 Overview. Com-
bined heat and power (CHP) is
one type of gas-fired BTM gen-
eration. The National Institute
of Building Science’s (NIBS)
Whole Building Design Guide
(Fields 2016) provides a com-
prehensive overview of CHP;
the most relevant aspects are
summarized in this section.
Like the gas-fired BTM gener- Figure 4.7 Typical CHP system components.
ation outlined in Section 4.4.2,
CHP uses a prime mover to
generate electricity through fuel combustion. The waste heat is additionally used as all or a portion of
the thermal input for a nearby process. CHP is therefore applicable when a consistent thermal load is
present at the facility, such as for hot water at hotels, laundry facilities, hospitals, and full-service
restaurants. They are also applicable to district energy systems such as those that serve hospitals and
higher education campuses. The recovered heat increases the overall system efficiency and improves
system economics, often paying back the initial investment in several years. This configuration of CHP
is known as a topping cycle. Another configuration, known as a bottoming cycle, uses waste heat to gener-
ate electricity. Since electricity is the primary output of topping cycle CHP systems, this section focuses
on it and does not provide more detail on bottoming cycle CHP systems. Figure 4.7 illustrates the typ-
ical components of a topping cycle CHP system.
Unlike emergency-only, gas-fired BTM generation, CHP is designed and operated to pro-
vide electricity and heat for much of the year. In this configuration, they may also support peak
demand reduction and demand response. They are also capable of acting as the backup generator
in islanded mode, although additional interconnection requirements will apply.
4.4.3.2 Design Considerations. When selecting a prime mover for a CHP system, it is import-
ant to understand the advantages, disadvantages, and relevant characteristics of each. Three of the most
important design decisions are a prime mover’s start-up time, availability, and thermal application.
Start-up time refers to the time needed for a prime mover to provide electricity and heat. Availability is
the proportion of time a prime mover can produce electricity or heat. Thermal application depends on
the thermal quality of the heat recovered. Table 4.1 summarizes these aspects of different CHP prime
mover types.
Table 4.1 Prime Mover Characteristics
Prime Mover Start-Up Time Availability Thermal Application
Gas turbine 10–60 minutes 93%–96% Space heating, hot water, low- and high-
pressure steam
Microturbine 60 seconds 98%–99% Space heating, hot water, absorption chiller
Reciprocating engine 10 seconds 96%–98% Space heating, hot water, absorption chiller,
low-pressure steam
Steam turbine 1–24 hours ~100% District heating, hot water, absorption
chiller, process steam
Source: EPA Combined Heat and Power Partnership (2019)
CHP systems may allow designers to eliminate other heating equipment, such as boilers, from
their design, thereby saving capital cost. This can further reduce or eliminate the need for danger-
ous and expensive high-voltage lines.
If operating the CHP in parallel with the grid, the interconnection process will apply.
4.4.3.3 Operational Considerations. CHP’s increased system efficiency results in
reduced energy costs. This, combined with CHP's flexibility to operate during peak periods,
minimizes the impact of volatile fuel prices on the facility’s operating budget.
CHP systems may be designed to operate during periods when the grid is down. This
increases the facility’s resilience to power outages.
CHP systems should be routinely inspected with associated scheduled maintenance.
Maintenance costs are similar between most prime movers. If being operated as emergency
backup, functional testing is required to ensure the system operates during periods when the
grid is down.
4.4.4 Fuel Cells
4.4.4.1 Overview. Fuel
cells are a unique type of gas-
fired BTM generation. They
use fuel to generate electricity
via an electrochemical process as
opposed to combustion. The
waste heat from this process
may also be used as an input for
a thermal process. In this
arrangement, fuel cells are a
form of CHP. NIBS’ Whole Figure 4.8 Typical fuel cell system components.
Building Design Guide (WBDG
2016) provides a comprehensive overview of fuel cells; the most relevant aspects are summarized
below. Figure 4.8 illustrates the typical components of a fuel cell system.
In addition to these external components, the fuel cell itself includes:
• a fuel delivery module, which converts fuel to hydrogen and purifies

• a fuel cell stack, which converts hydrogen to electricity and heat
• balance-of-system components for monitoring and regulation
• a power electronics module, which often includes an internal inverter that converts electrical
current from dc to ac
• a control system
Fuel cells are currently most often implemented for reliability purposes, particularly in areas
where grid reliability is relatively low or 100% process uptime is required. Due to their high reli-
ability, fuel cells may be substituted for electrical storage equipment. When considering which to
pursue, fuel cells advantages include:
• Less space requirements

• Operate in cold climates
• Allow for heat recovery
Table 4.2 summarizes the most common types of fuel cells.

4.4.4.2 Design Considerations. Fuel cells may be considered a form of CHP. They should
therefore be considered when selecting a prime mover. Table 4.3 summarizes the start-up time,
availability, and thermal applications of fuel cells.
Fuel cells require a concrete pad with associated room and ventilation, electrical and natural
gas service and fire suppression capabilities. NFPA 2, Hydrogen Technologies Code requires mini-
mum separation distances from gaseous hydrogen storage (NFPA 2011).
If operating the fuel cells in parallel with the grid, the interconnection process will apply. Note
that the interconnection process may have fuel-cell-specific requirements.
4.4.4.3 Operational Considerations. Fuel cells are most economical for facilities with low
natural gas and high electricity prices. This relationship is called the spark spread. They offer fur-
ther economic value by reducing peak demand in facilities with high demand charges. They oper-
ate most effectively when they run continuously, meaning they should be paired with constant
electrical or heat loads (Casteel 2019). Fuel cells may be leased, minimizing the facility staff’s time
spent operating and maintaining the system. Power purchasing agreements are also available.
If a facility elects to own their fuel cells, they should be routinely inspected with associated
scheduled maintenance. Fuel cell maintenance costs are typically slightly higher than other prime
movers. If being operated as emergency backup, functional testing is required to ensure the system
operates during periods when the grid is down.
Table 4.2 Fuel Cell Types

Fuel Cell Type Typical Application Power Output, kW
Phosphoric acid Commercial (office, hospital, nursing homes, banks, schools) 100 to 400
Molten carbonate Industrial 300 to 3000
Polymer electrolyte Backup power 1 to 100
membrane
Solid oxide Residential and commercial 1 to 2000
Table 4.3 Fuel Cell Characteristics

Prime Mover Start-Up Time Availability Thermal Application
Fuel Cell 3 to 48 hours >95% Hot water, low and high-pressure
steam
Source: EPA Combined Heat and Power Partnership (2019)
4.5 ENERGY STORAGE

• Energy storage is fast becoming one of the most popular DERs, as it allows the building
to provide grid flexibility while other building systems continue to operate with no inter-
vention.
• Battery energy storage practices are described, along with other options for energy
storage—like thermal energy storage.
As one of the primary goals of the smart grid is to allow utilities, users, and other actors to
shift loads in time, energy storage will be a key component of smart-grid-operable buildings. This
section will cover active storage using batteries, flywheels, and cool thermal storage (including
refrigeration). There are other building systems that can add significant storage to buildings in
concert with building control: building thermal mass, water heating, and some types of appli-
ances. These elements are covered in Section 4.7. DOE has recently published a guide for owners
deciding on energy storage systems called On-Site Energy Storage Decision Guide (DOE 2017);
this would be a good starting point for those beginning to investigate energy storage for their
facility.
4.5.1 Battery Energy Storage
One very direct method for storing energy is to charge batteries using electricity. Battery
energy storage systems (BESS) have been used in buildings for decades as a backup power supply
for outages, especially in mission-critical facilities. But the costs of battery storage have been
dropping substantially; capital costs fell by 35% for lithium-ion systems in 2018 alone (Goldie-
Scot 2019) and are expected to continue to decline (Wilson 2018). So the economics are chang-
ing. When coupled with the smart grid, it can now be cost effective to install much larger battery
systems to capture a number of demand management benefits at the building scale. A battery sys-
tem is specified for a building according to (primarily) both its rated power capacity (in kW) and
its energy capacity (in kWh). The degradation (how energy capacity is likely to change over time)
is also important to understand as batteries tend to degrade even in their first decade of operation.
In choosing battery storage for your building, there are a few primary types to consider, as
shown in Table 4.4. Some information within this table comes from a report by Makhyoun and
Taylor (2014).
Battery storage can provide many different benefits in a grid-interactive building beyond the
traditional usage of backup power. An owner’s decision to invest in installing a larger battery stor-
age system depends heavily on which of these benefits will lead to the best financial value; this has
been called value stacking. A comprehensive discussion of all of these value streams can be found
in Chapter 3. Those values that most commonly provide large value to an owner for battery stor-
age include the following: frequency regulation for the grid, partial deferral of generation or trans-
mission assets for a utility, demand charge reduction, or time-of-use (TOU) (or even real-time
price) bill management. Each of these value streams can yield $50 to $200 per kW per year for a
battery storage system (Fitzgerald et al. 2015). Note that while value stacking can help justify
such a system, the streams can be in conflict and require sophisticated operation (see below). Note
that economic analysis should include estimated lifetimes; many are on the order of 10 years, but
they do vary. If first costs seem prohibitive for a prospective project, consider emerging options to
share the costs (and consequently the value) of batteries with third parties, such as energy supply
Table 4.4 Battery Storage Options

Lithium-ion • Newer battery technology, more expensive than lead acid but dropping in cost
(Li-ion) • High energy density with small footprint, resulting in popularity in vehicle and portable use
• Thermally sensitive; requires conditioned space
• Longer life span than other common options
Lead acid • Most traditional battery technology, due primarily to low cost
• Less thermally sensitive; no space conditioning needed, but requires ventilation
• Lower energy density leads to larger footprint.
UPS • Uninterruptible power supply (UPS) for mission critical facilities (e.g., data centers)
• Lead acid batteries designed with faster response and controls to be used for power quality/condi-
tioning and backup; Li-ion batteries are beginning to be used for this
Others • Flow batteries: safer, longer life, more efficient, but expensive and still in need of development
• Other applicable battery types are in testing and development, such as nickel–cadmium
Source: Makhyoun and Taylor (2014)
companies (ESCOs), for-profit firms offering purchased power agreements (PPAs), and your
utility.
4.5.1.1 Design Considerations. Larger battery storage installations are complex systems,
and the process of designing and installing them is similar to other building systems; they require
planning, design, independent procurement, installation, integration, start-up, and ongoing
maintenance. These steps are outlined in detail for large systems by the Energy Storage Integra-
tion Council (Minear 2017). This guide is focused on utility-scale systems in front of the meter,
but most of the steps may be followed for systems behind the meter. Specific considerations for
steps through installation include those below.
Size. Unless a battery system is to be used only for backup power of a known quantity of elec-
trical load, sizing a battery system is a complex calculation that must consider the scale and timing
of all potential revenue streams for capture. There are some calculation tools such as the Electric
Power Research Institutes (EPRI) Storage Vet1 or DOE’s Energy Storage Computation Tool2
that can help a project find a starting point for system sizing.
Safety. Batteries do pose some potential hazards that must be addressed in design and opera-
tions; designers should be aware of the applicable safety standards. The California Public Utilities
Commission (CPUC) publishes a useful set of best practices for design and installation, including
an inspection checklist and references to standards (CPUC n.d.). UL now provides a listing for
electrical energy storage system, UL 9540A, which covers charging and discharging, protection,
control, communication, fluid movement, and other aspects (UL 2018).
One specific safety hazard, especially for some types of batteries like Li-ion, is fire. NFPA
now has a proposed standard to address this hazard which should be followed, NFPA 855 (NFPA
n.d.).
Leave Adequate Space. Battery storage systems require more space than just what the batter-
ies themselves take up. Self-contained, outdoor battery systems are an option, though there are
maintenance and potentially longevity benefits to making room for them in the building enclo-
sure. The system should be designed assuming hardware adjustments and expansions will be
made. The life of even the initial batteries is prolonged if additional batteries can be added over
1. https://www.storagevet.com/
2. https://www.smartgrid.gov/recovery_act/analytical_approach/energy_storage_computational_tool.html
time, so excess space should be planned. In addition, battery storage is a dynamic marketplace at
present, so both replacement and expansion should be assumed given the advent of new technolo-
gies.
Supplemental Equipment. Some supplemental equipment is also required when using bat-
teries. The design and space must account for this. In addition to the building switchgear being
able to both receive and send power to the grid, transfer hardware must be included that switches
between charge and discharge of the batteries; associated controls are also needed. Finally, an
inverter will be included in most buildings where the battery (which is dc power) only serves ac
distribution in the building. In many cases, the inverter may include all of these functions in a sin-
gle package.
HVAC. Li-ion batteries are thermally sensitive, and therefore need to be conditioned. This
generally means placing them in a conditioned space or container, and because a battery storage
system emits heat this generally result in significant cooling demand to the space. Mechanical
design needs to coordinate with the designer of the battery system to create an HVAC system that
can condition this space and system; consider potential expansion of the system in the future too.
For some types of batteries, such as lead acid, ventilation is also required due to off-gassing
from the batteries. More guidance on both cooling and ventilation for batteries can be found in
IEEE Standard 1635/ASHRAE Guideline 21, Guide for the Ventilation and Thermal Management
of Batteries for Stationary Applications (ASHRAE 2018).
Emergency Backup Provisions. One value stream that is often included to justify battery
storage is emergency backup power in case of outages instead of a generator. If this is planned, the
battery storage system must meet a number of other requirements to adequately meet life safety
needs in the building, such as meeting UL 924.
Buildings with PV (Pless et al. 2019). Considerations for PV are discussed in Section 4.4.1,
but there are additional considerations when siting PV and storage together (typically referred to
as solar plus storage or solar + storage).
• Distribution and inverter design between PV panels and batteries can be designed to
minimize losses and maximize flexibility. For example, solar plus storage systems typically
include a dc link from the PV to battery to reduce conversion losses.
• Control sequences for charge/discharge need to account for the rate impacts of net metering;
this could include prediction algorithms for predicted solar generation.
• Standalone PV systems can cause voltage or reactive power issues which are often corrected by
advanced inverter functions; batteries can be used as a more cost-effective way to mitigate
these issues.
• Battery energy storage systems sited with PV may be eligible for a 30% federal tax credit
(DSIRE 2019).
4.5.1.2 Operational Considerations. Once battery systems are installed they do require
start-up, commissioning, and ongoing maintenance to work properly. Commissioning and main-
tenance should proceed according to manufacturer’s specifications, which vary from battery type
to battery type. This likely includes testing for both battery performance (capacity and power) and
testing of controls for switching to charge, discharge, and disabled states based on all possible
input signals.
One primary operational consideration for all battery systems is the timing of charge and dis-
charge of the system. The timing of these modes will differ depending on the benefits that the
battery owner is attempting to capture. Batteries are one of the most versatile of all distributed
energy resources and can capture most of the benefits described in Chapter 3. Most often, batter-
ies are used for:
• Emergency backup power for grid outages

• Shifting load to periods of cheaper electricity (sometimes specifically incentivized by utility
load shifting programs); also known as energy arbitrage
• Limiting peak demand at a facility to reduce demand or ratchet charges
• Providing frequency regulation services to the local utility
• Providing dispatchable local capacity (as a service to the utility) in a region where distribution
or transmission are constrained
4.5.2 Other Electrical Energy Storage

Flywheels are one other technology being used in commercial buildings for direct storage of
electrical energy (Hood 2017). A flywheel is simply a spinning mass large enough to store kinetic
energy that can immediately (in fractions of a second) be switched to generating electricity by
spinning a generator. Current flywheel systems are used for the shortest time-duration value
streams, with their primary value coming as short-term uninterruptible power supplies (UPSs),
providing enough backup power to bridge a facility to use of its fuel-powered generator. They can
also be used for short duration services, such as frequency regulation. Flywheels are already in
mainstream use in health care because they respond well to the variable demands of imaging
equipment. They can also be cost-effective in other mission critical facilities. They last much lon-
ger (15 to 20 years) than batteries without any of the chemical hazards. In the future, larger fly-
wheel systems may be installed that can capture more value for owners harnessing the smart grid;
this is not currently a mainstream application of flywheels.
There are some other electrical energy storage options (e.g., compressed air), but they have
not currently gained significant market traction at the building scale for reasons such as cost, flex-
ibility, efficiency, and size.
4.6 COOL THERMAL STORAGE
Electrical energy storage systems are often discharged in the afternoon to maximize demand
management benefits. At this time of day in most U.S. climates, there is often significant cooling
load on buildings and on refrigeration systems where applicable. These thermal loads are met with
electrically powered mechanical refrigeration, and so often the electricity discharged by batteries
goes to meet this load. As a result, cool thermal storage can be an option discussed in the same
conversations as batteries to capture most of the same values from the smart grid.
In the right application, there can be a number of reasons to implement cool thermal storage
in addition to, or in place of, storing the electricity itself in a battery or other device:
• At current prices, a basic thermal storage system can cost less than battery storage.
• The cycle efficiency (of charging and then discharging) is higher for thermal storage systems.
• There is no degradation of thermal storage capacity with time; lifetimes can be many decades.
• Thermal storage can reduce HVAC system size, offsetting a portion of its first cost, and even
adding overall energy savings (not just load shifting and demand reduction) in many cases.
There are a variety of cool thermal storage options to choose from, as shown in Table 4.5.
Table 4.5 Options for Adding Cool Thermal Storage to Commercial Buildings
Ice storage systems are most commonly added to
chilled-water plants but are also available for some
direct expansion (DX) units. During off-peak
periods, chillers make ice in tanks. The ice is used
HVAC Ice
to meet cooling loads at peak times to reduce or
Storage
eliminate chiller energy demand. Space and controls
are needed for the storage tanks. Chiller efficiency
is impacted by different operating temperatures and
times of day.
Similar to ice storage systems, but without the more
extreme temperatures of ice, cooling can simply be
stored in large tanks of chilled water. The system is
HVAC Chilled- simpler and chiller efficiency is better, but without
Water Storage the phase change of ice, the capacity per tank size is
only about ¼ that of ice storage. This storage
methods is best for buildings with a large amount of
excess space available on site.
Ice storage is now available for refrigeration systems
as well. This allows buildings like supermarkets and
refrigerated warehouses to participate in the
Refrigeration
benefits of substantial energy storage, using their
Storage
core mechanical systems. These systems are similar
(Active)
to HVAC ice storage but require dedicated
equipment for refrigeration temperatures, fluids,
and control.
Phase-change materials (PCMs) can be retrofitted
into existing commercial building space or
refrigerated spaces, often through installation of
packets of material at the ceiling. These materials,
unlike ice, change from solid to liquid phase at a
Phase-Change
higher, tunable temperature. Coupled with
Materials
advanced space temperature controls to melt and
freeze the PCM with subtle changes in the space
temperature (often about 1°F [0.5°C]), PCMs allow
thermal storage to occur without adding mechanical
equipment.

Cool thermal storage is one of most well-established resources in this chapter. As such,
ASHRAE already has a separate guide devoted to its best practices: ASHRAE Design Guide
for Cool Thermal Storage (Glazer 2019), as well as a full chapter in ASHRAE Handbook—
HVAC Systems and Equipment (ASHRAE 2016c). These two references should be consulted
for general design guidance as they have much more detail than there is room for in this
guide. For a summary of application guidance, readers can also see “Application Fundamen-
tals of Ice-based Thermal Storage” (Silvetti 2002) from the ASHRAE Journal. These refer-
ences do predate the rise of smart grid applications, but a basic understanding of design and
operation is necessary to plan for smart grid integration in any case. Some additional consid-
erations follow.
Integration with Other DERs and Microgrids. Both design and control of thermal storage sys-
tems are impacted if the owner aims to take advantage of DERs like renewable energy or connec-
tion to a microgrid. Thermal storage can be sized and controlled to minimize the amount of
energy sold back to the grid if pricing is not favorable. Additional value streams from the smart
grid may also lead to increased size of thermal storage. One case study has been published of ther-
mal storage in a U.S. Navy microgrid (Hawxhurst et al. 2017), and an ASHRAE research project
analyzed general strategies for increasing deployment of renewables through coupling with ther-
mal storage (Van Asselt et al. 2018).
Storage on DX Units. Where possible, implementing storage on smaller direct expansion (DX)
units provides some additional value to be considered by designers: these units tend to have low utiliza-
tion rates (i.e., equivalent full load hours) as typically sized and small compressors can pose electrical
challenges after outages due to inrush current.
Space. All thermal storage systems take up significant space on a building site. Chilled-water stor-
age takes up the most space; ice storage uses ¼ as much volume. Integrating PCMs into the building
structure itself avoids using additional space.

Typical cool thermal storage systems operate on a daily cycle, with a primary goal of discharging
the thermal storage during the few hours of the day with the highest cooling load and/or utility rates.
This reduces peak utility costs and in many cases allows for small chiller equipment to be installed.
Even the relatively simple operational goal of reducing peak utility cost has numerous strategy choices
across varying level of chiller priority, storage priority, and demand limiting. These are usually applied
based on the time of day, generally related to utility rate structures, in a manner that attempts to mini-
mize utility costs while ensuring that all loads can be met. But once the additional value of smart grid is
added, even more operational options emerge, and decisions likely change. As a result, there is no sim-
ple, single best practice for operating thermal storage in a smart grid context. Custom analysis (and
possibly continuing optimization using model predictive control) that incorporates the available value
streams is required. In conducting analysis, a high-level consideration should be determining whether
real-time energy costs, TOU rates, peak demand reduction, or renewable energy utilization is the pri-
mary value stream, and focus optimization there (though other value streams may be added to the pri-
mary). This decision is heavily rate-dependent. Some guidance is available in literature on capturing
value based on some of these drivers:
If peak demand reduction is the primary driver of value:
a. Be vigilant of “rebound” after the thermal storage is depleted; if there are still calls for cooling
all chillers may immediately ramp up and reset the peak demand higher.
b. Thermal storage can be used as a demand response mechanism (because demand response
value will generally outweigh rate benefits of thermal storage on a given day) unless demand
ratchet avoidance is a primary driver. If demand response is a driver, consider OpenADR.
If real-time pricing is the primary driver of value:

c. The current or day-ahead utility rate should be incorporated into control of storage, as a direct
input into the BAS if possible.
If renewable energy utilization is the primary driver of value:

d. See “Strategies to Increase Deployment of Renewables Using Cool Thermal Energy Storage”
for an understanding of the controls trade-offs (Van Asselt et al. 2018).
4.7 ADVANCED INVERTERS

• Advanced inverters enable interconnection by connecting DERs to the grid while providing
other grid services.
• As this technology develops, it will allow for expanded DERs on more commercial building proj-
ects.
Inverters are electronic equipment that convert electrical power from direct current (dc) to
alternating current (ac), matching the grid’s voltage, frequency, and phase (AEIC 2018). They
further ensure that the power quality of the local grid is not adversely affected by this connection,
automatically disconnecting the DER when conditions exceed predefined limits. Inverters are
therefore a critical piece in ensuring DERs operate effectively with the grid.
Within the context of DER, standard inverters have predominately been used for intercon-
necting distributed PV systems to the building’s electrical system and the grid. Distributed PV
systems in the U.S. are expected to grow from 3.3 to 5.5 GW from 2014 to 2023 (Navigant 2014).
As installed capacity increases, the destabilizing effect that PV systems can have on grid quality
will become increasingly pronounced. One solution is advanced inverters (NREL 2014; Reiter et
al. 2015). California Rule 21 defines advanced inverters (sometimes referred to as advanced
inverters) as an “inverter that performs functions that, when activated, can autonomously contrib-
ute to grid support during excursions from normal operating voltage and frequency system condi-
tions” (PG&E n.d., CPUC 2017). Advanced inverters therefore improve upon standard inverters
by allowing DERs to both continue to operate for longer periods and actively stabilizing the grid's
power quality. Additional communication capabilities allow utilities to both see advanced inverter
status and potentially control their behavior, making them a vital component of the smart grid.
Taken together, their functionality and communications will become increasingly important with
increasing DER installed capacity. Advanced inverters have seen limited deployment to date. The
pilot deployments have primarily been in states with significant distributed PV such as Hawaii,
California, and Arizona (Reiter et al. 2015).
Many inverters on the market currently have advanced functionality involving reactive
power, power factor, frequency, and harmonics. This is particularly true for inverters rated to
serve loads greater than 30 kW (EPRI 2010). Advanced functionality is increasingly being
incorporated into smaller inverters. Designers may choose to enable this functionality,
thereby upgrading from a standard to an advanced inverter. The incremental cost of this
upgrade is minimal. The primary advanced inverter functions are outlined in Table 4.6.
Designers should ensure that inverters are properly sized for reactive power modulation.
Advanced inverters can operate autonomously or may be coupled with communications
systems to both report their status and accept external commands. This DER visibility and
remote control will be particularly beneficial to utilities in the future. However, the commu-
nication capabilities are the least proven of advanced inverter functionality, needing contin-
ued development and testing to be considered a robust feature (NREL 2015).
Advanced inverters may incorporate battery storage functions including the ability to
charge storage from either the PV or grid, manage storage based on time or price schedules,
use local storage when responding to power reduction requests, and modulate the charge/dis-
Table 4.6 Advanced Inverter Functions

Function Description
Remote Connect/Disconnect Accepts remote signal to remove connection to the grid
Power Curtailment Sets maximum allowable real power supplied to grid
Power Factor Control Sets power factor
Real Power Control Sets limit and adjusts rate of real power supplied
Reactive Power Control Sets amount of reactive power supplied
Priority Setting Sets whether to prioritize real or reactive power
Soft Start Ensures distributed PV systems on same distribution circuit re-
energize at different times
Volt-VAR Manage VAR output as a function of grid voltage, may prioritize
either watt or VAR output
Volt-Watt Manage power output as a function of grid voltage by modulating
supplied power
Dynamic Reactive Current Provide reactive current as a function of voltage changes
Support
Under/Over Voltage Ride Remain connected during brief voltage sags or swells
Through
Under/Over Frequency Ride Remain connected during brief frequency disturbances
Through
Unintentional Energizing Safety functions to protect against accidentally energizing the grid
Prevention during power outages
Status Reporting/Time Reporting of operating mode, status (temperature, online/offline,
Stamping errors, and history) and set points
Sources: NREL (2014), EPRI (2012)
charge rate in response to local line voltage or frequency. An additional electrical connection
to the local storage may be necessary.
Advanced inverters should be designed to comply with local jurisdiction requirements,
often including NFPA 70 (2017), IEEE 1547 (2018), and UL 1741 (2010).

Advanced inverters should be properly installed and commissioned. This should involve
training for facility staff. Status reports should be checked regularly and maintenance should
be conducted annually by a certified professional.
Customer privacy concerns and ambiguous compensation structures may be barriers to
advanced inverter implementation (EPRI and SEPA 2015). Building professionals should
research how their data will be handled if communication capabilities are utilized. They
should also understand how they will be compensated for any services rendered to the grid.
4.8 ADVANCED BUILDING LOAD CONTROLS

• An easy method for a building to provide grid flexibility is via its existing building auto-
mation. This section describes the different means and methods by which a building
can use automation of typical systems like HVAC and lighting to provide that flexibility.
Demand management inherently requires that loads and systems in a building be controlled in
a meaningful way. The majority of building systems that are currently engaged in demand man-
agement do so at the building level through a building automation system (BAS) or energy man-
agement system (EMS) (not to be confused with the EMS used by grid operators to control,
monitor, and optimize the grid’s electricity generation, transmission, and distribution), with a
human-in-the-loop. This human operator determines when to implement demand limiting con-
trols, charge/discharge batteries, start up or shut down CHP, and so on. As the smart grid
becomes more prevalent, some of these systems are capable of managing demand without that
operator input, using communication protocols such as OpenADR. There are also a growing
number of individual building components that can be connected to the smart grid directly with-
out being aggregated at the building level. These automated communications are discussed in
more detail in Chapter 8.
When interaction between a BAS or EMS and the smart grid is enabled, that system must
also be integrated with DERs and building loads that are capable of providing load flexibility if
they are to have any impact. Integration of these controls with a DER like a battery or on-site
storage is relatively straightforward; the DER will have only a few discrete modes of control that
will not affect other building systems. Building loads, however, are also beholden to meeting crit-
ical user needs such as comfort (e.g., cooling), productivity (e.g., plug loads), and safety (e.g.,
lighting). As such, load will also be controlled on a manual or automatic control loop (e.g., sensor,
controller, actuator loop like a thermostat) to meet those end uses separately from the needs of
demand management. Demand management must be integrated and often continually coordi-
nated with this existing control loop, whether a human operator is involved or not. For all these
reasons, there are a subset of building loads that lend themselves better to demand management
than others.
4.8.1 Mechanisms for Demand Management

The primary mechanism for demand management in a building is to modulate HVAC equip-
ment (with cooling perhaps most common), which uses substantial electricity. This usually means
temporarily reducing HVAC services to spaces but can also mean coordinating the cycling of
HVAC equipment without impact on the spaces. There are some HVAC controls that can be
modulated in real time to provide demand response (DR), load shifting (shift), demand limiting
(limit), or even frequency regulation grid services (modulate), including:
• Resetting zone thermostats. Usually increasing them to reduce cooling, but the opposite could
be done for heating. (DR, shift.)
• Resetting supply air pressure or temperature. In air-distribution systems such as forced air
variable air volume. (DR, shift.)
• Modulating compressors. Compressor modulation is commonly possible in chillers and

variable refrigerant flow (VRF) systems, but variable-speed or multistage DX systems may
also be able to be modulated. (Limit, modulate.)
• Modulating fan speed. This is similar to resetting supply air pressure, but could be a simpler
control for any variable speed fan system. (DR, shift, modulate.)
• Chiller staging. Could include switching from electrically driven chillers to gas-fired
absorption chillers, if both exist in a facility. Could also include adjusting the number of
chillers (or which) are used. (DR, modulate.)
• Shutting off electric water heating equipment. Where significant hot-water storage exists
(either for domestic or heating water) the water heating elements can be shut off to manage
load. (DR, limit, shift.)
• Other use cases may also be available, especially in more unique HVAC systems or building
types.
To provide load shifting, it is also possible to implement load management in buildings in a

predictive way using inherent passive storage potential in the buildings. This is one control appli-
cation where model-predictive control (see Section 4.3.2, “Operational Considerations”) provides
value, optimizing building operation based on forecasted ideal building performance. Options for
this type of control include:
• Precooling or preheating the building. For buildings with significant mass (e.g., concrete walls
or floors), the building can be precooled before a period where load management is desired,
and then cooling equipment can be modulated or shut off during the load management
period. The opposite could be done in electrically heated buildings, for example, in a grid with
a morning heating-driven peak.
• Phase-change materials. Building off of the precooling method, it is also possible to add
additional mass to a building space using phase-change materials (PCM). These are chemicals
with a controlled melting point, usually close to the space temperature (melting at 70°F
[21°C], unlike using ice which melts at 32°F [0°C]). As the material is changing phase, it can
store a substantial amount of energy in a low volume of material; this even allows for mass to
be added in a retrofit scenario. The space temperature set point can then be modulated just
below the melting point (e.g., 69°F [20°C]) to precool the space and freeze the PCM, and
then modulated just above the melting point (e.g., 71°F [22°C]) to shut off the mechanical
cooling and allow the melting PCM to absorb all of the internal heat in the building.
• Preheating hot-water storage. Again, where significant hot-water storage exists (either for
domestic or heating water), an electric water heater could preheat the water to a temperature
much hotter than required, so that heating elements can be modulated as needed to manage
electric load. It is important that mixing valves be well designed if this approach is used in
domestic hot-water systems so that occupants do not scald themselves by coming in direct
contact with the higher temperature water. ASHRAE Standard 94.2 establishes a method of
test to standardize these systems to some extent (ASHRAE 2010).
• Management of ground-source heat pump systems. Ground-source heat pump (GSHP)
systems inherently store energy in the ground surrounding their ground heat exchangers. The
ground can be operated to minimize electric usage during certain times of day (most often by
precooling the ground); this approach is most effective with hybrid GSHPs that make use of
supplemental cooling equipment.
• The thermal mass of food in refrigerated spaces is a newer application of passive storage.
Supermarkets and food storage facilities can allow temperature set points to rise by a small
amount in a space (without negative impact on food safety), and the thermal mass of the food
itself allows the refrigeration system to decrease its usage significantly during those periods.
During these periods facilities may also use behavioral approaches such as leaving doors closed
or rescheduling restocking.
• Another approach to demand management is dimming the building’s interior lighting (CEC
2011). Building occupants have been shown to adjust to small, temporary reductions in
interior light levels. The efficiency of newer LED lighting systems makes the impact of this
mechanism smaller than the HVAC for HVAC systems.
Some plug loads may also be able to be shut off for demand management purposes. Options
include refrigerated vending machines and certain appliances such as dryers and televisions. This
end use is limited because most plug loads impact valuable productivity in commercial buildings.
Appliances are one segment of plug loads that could potentially be used for a distributed load
management approach as smart appliances become more ubiquitous and demand management
protocols can communicate directly with them.
Generally, these adjustments are not made by hand; a BAS facilitates all of these mechanisms.
Complete BAS packages generally include demand management capabilities. Some proprietary
packaged equipment now also includes this capability directly, such as rooftop units, water heat-
ers, smart appliances, and even some smart light fixtures.
Designers should consider capabilities for managing building demand and smart grid
interaction during all phases of design. Detailed guidance directed at designers is described in
Building System Design Considerations.
At a high level, designers should consider including a few key components:
• Provide real-time energy feedback. Real-time feedback of building electrical demand at

the meter is critical. Feedback should be real time (less than one-minute lag to cover most
grid services). Submetering at a more granular level (major HVAC equipment, separate
HVAC and lighting meters, and so on.) can also substantially aid in decision-making
when the operator is trying to limit demand. Create an object for this demand in the BAS
to enable more functionality. Energy management information systems (EMIS) are
layered on top of a BAS or EMS. They incorporate demand management visualization,
analytics, and even fault detection of demand management functions. Any grid services
desired should be included in the value proposition of adding an EMIS to a project.
• Use standard, open protocols. In designing a building to interact with the grid, use of
standardized communication protocols is highly recommended. Use of BACnet®-
compatible hardware and software throughout the building is a good start. More
advanced protocols that address communication directly with the grid are described in
Building-To-Grid Related Communication Protocols (Section 8.3 in Chapter 8).
Similarly, choose standard, open protocols and avoid proprietary protocols wherever
possible.
• Design for flexibility. Design for grid interaction is a newer approach and guidance is
subject to change. Incorporate the recommendations for high-level building
infrastructure, then consider implementing just one or two of the specific load control
strategies to start. More control can then be added.
• Choose to centralize or not. Determine whether your building will be utilizing a centralized
or decentralized approach to demand management (see Section 8.2), and procure either
the automation system or system controls with the appropriate smart grid management
capabilities. If a decentralized approach is used and the building does not have a full BAS,
consider upgrading to connected devices (sometimes sold under the moniker “smart”)
such as connected pumps, valves, rooftop units (RTUs), and more. Connected device
manufacturers are adding grid interaction capabilities to these devices.
• Functionally test for demand management. Commissioning, including functional testing,
of HVAC systems has become commonplace in commercial buildings to ensure proper
energy performance. Similar functional testing should be applied to demand controls and
control sequences at startup to ensure that they respond appropriately when the real need
for management arises.
4.9 ELECTRIC VEHICLES

• Electric vehicles are increasingly being included as part of commercial building infra-
structure.
• Understanding the basics of EVs and their design and operational considerations will
allow building professionals to begin including them on their own projects.
Electric vehicles (EVs) are

rapidly growing in popularity
due to decreasing cost and
improved performance. As of
2018, there were approximately
1 million EVs in the U.S., and
this number is projected to grow
to 19 million by 2030 (SEPA
2019b). As opposed to conven-
tional vehicles, EVs use electric- Figure 4.9 Typical EVSE.
ity as their primary fuel.
Electrical energy is stored in a large battery and converted to motive power by electric motors. As
opposed to the other DERs, EVs are purchased for transportation purposes, not the electric ser-
vices they can provide a building. However, since they must plug in to recharge, EVs can also be
considered an extension of a building’s electrical system, with the associated electrical equipment
being designed and operated by building professionals. The equipment that EVs use to recharge is
called electric vehicle supply equipment (EVSE). The National Electric Code® defines EVSE as
“the conductors, including the ungrounded, ground, and equipment grounding conductors and
the electric vehicle connectors, attachment plugs, and all other fittings, devices, power outlets or
apparatus installed specifically for the purpose of delivering energy from the premises wiring to
the electric vehicle” (NFPA 2017). The typical equipment involved with EVSE is illustrated in
Figure 4.9.
EVSE falls into three categories as outlined in Table 4.7.
Table 4.7 EVSE Categories and Characteristics

Category Current Type Current,amps Voltage, V Power, kW Typical Application
Level 1 ac 12 to 16 120 1.3 to 1.9 Residential
Level 2 ac <80 240 <19.2 Commercial
dc fast dc <200 208 to 600 50 to 150 Transportation Corridor

charging
Source: DOE (2012)
Each level will charge an EV at different rates. Level 1 is the slowest with typical charge times
exceeding 10 hours, making it most applicable for overnight charging in residential applications.
dc fast charging is the fastest with typical charge times under 30 minutes, making it most applica-
ble for fueling station applications in transportation corridors. Level 2 is an interim option with
typical charge times on the order of a few hours, making it a popular option for commercial and
multifamily applications.
When designing EVSE for commercial and multifamily buildings, the first step is to estimate
the number of charging stations. Level 2 chargers typically serve one EV each. For existing build-
ings, the next step is to determine whether existing electrical equipment, such as transformers and
circuits, is sufficient to serve the EVSE. Do circuits need to be added? Is the existing electrical
equipment sized to handle the increased load? For new construction, the same design questions
should be answered during design. Some additional design considerations include:
• Add a submeter to segregate vehicle chargers from other building loads

• Minimize the distance between EV parking and electric service
• Ensure charging cords do not block pedestrian pathways
• Locate charging away from water pooling or irrigation sprays. Although EVSE equipment is
safe when wet, this will help users feel more comfortable when using equipment.
• Add curbs, wheel stops, and setbacks to prevent damage to chargers
• Reduce vandalism by adding security lighting, alarms, and enclosures as necessary
• Add signage to identify EV spaces
• Ensure compliance with the American with Disabilities Act (ADA) by considering proper
connector and receptacle heights, curb cuts, and handicap-accessible parking spaces (DOE
2012).
It is important to understand applicable codes when designing EVSE. The 2018 International
Building Code, Section 406.2.7, states “Where provided, electric vehicle charging stations shall
be installed in accordance with NFPA 70. Electric vehicle charging system equipment shall be
listed and labeled in accordance with UL 2202. Electric vehicle supply equipment shall be listed
and labeled in accordance with UL 2594. Accessibility to electric vehicle charging stations shall be
provided in accordance with Chapter 11” (ICC 2018). State and local jurisdictions may have
additional requirements, including obtaining an electrical or building permit (NYSERDA 2012).
Multifamily buildings have additional considerations, such as whether the EVSE will be in an
assigned or public parking spot (California Plug-In Electric Vehicle Collaborative 2013).
If EVSE is not justified during the design of a new building, it may be more pragmatic to
make the building EV Capable. This involves designing the electrical infrastructure and under-
ground conduit to meet future EV needs, without installing the expensive charger. This approach
is much less expensive than a comprehensive retrofit, including digging trenches and cutting
through walls, which would likely include digging trenches through landscape and pavement, as
well as cutting through walls.
Prior to implementing EVSE in existing or new construction, facility owners, and managers
should contact their local electric utility. They are often a valuable resource for EV information.
They also will be able to provide information regarding the impact of EVs on a building’s utility
rate structure and whether new electric meters are required. Utilities often offer special TOU rates
for buildings with EVs. These rate structures encourage charging during off-peak periods with
lower rates and demand charges. A growing percentage of charging equipment is incorporating
controls to automatically manage the time and rate of charging, optimizing the benefit to the
building. This managed charging provides extra capacity to the utility when needed and can
absorb surplus generation from renewable energy sources (SEPA 2019b). However, EV charging
may also be managed manually to charge outside of peak periods.
EVSE requires minimal maintenance. However, the equipment should be checked regularly for
wear and cleaned.
Another operational consideration is whether building owners will charge a fee for users to charge
their EVs. In some areas, doing so would qualify the building owner as a utility, triggering the associ-
ated regulatory procedures. Since this likely not attractive to most building owners, charging for use of
the parking spot as opposed to the charge itself is one alternative. Third party providers are also avail-
able in some areas to provide the chargers and handle the monetary transactions and associated regula-
tions.
EVs also have the potential to act as electrical storage, providing electrical power back to the grid.
This approach is called vehicle-to-grid (V2G) integration. It is currently in the early commercializa-
tion stage. One significant concern that needs to be addressed before wide-scale adoption is the impact
it will have on the battery’s warranty.
4.10 DER CAPABILITIES COMPARISON
In 2016, SEPA published Distributed Energy Resources Capabilities Guide, which compares different
DER capabilities for solar, battery storage, demand management, and energy efficiency. These tech-
nologies are evaluated based on their abilities to provide various grid services (including ancillary ser-
vices such as voltage and frequency regulations) at both the distribution and bulk power levels (SEPA
2016). A summary table is shown in Figure 4.10. Utility planners and grid operators can integrate
these capabilities into their systems as the smart grid evolves. Building owners and designers should
keep these capabilities in mind when designing and building future grid-interactive buildings.
Figure 4.10 DER capabilities matrix.

Source: SEPA (2016)
TECHNOLOGIES—
Strategies to Accrue
Smart Grid Benefits
Why This Chapter is Important

• This chapter discusses important considerations when determining the best strategies for
accruing smart grid benefits.
In Chapters 2 and 3, the guide presents the potential sources of benefit from smart grid tech-
nologies. In Chapter 4, specific technologies that can be deployed to achieve those benefits were
introduced in the form of DER. In this section, the guide discusses the operational strategies
available to building operators to accrue the benefits of the smart grid. Building operators should
understand deploying smart grid technologies to achieve demand cost savings through power
bills, using various strategies including load interruptions, peak shedding, peak shifting, and oper-
ating in intentional island mode. Another important consideration is understanding energy
impacts including energy efficiency and conservation interactions with DER, supplying energy to
the electric grid, and how to strategically increase energy consumption when necessary by taking
advantage of electric rate designs that encourage off-peak energy usage. This chapter will also dis-
cuss methods to improve access to financing solar projects. Finally, this chapter will touch on
reactive power and how that may be a source of benefit that can be derived from deployment of
smart grid technology.
5.1 ELECTRIC RATE SELECTION
Once the mix of smart grid components in a building are known, and the operating parame-
ters of those components are understood, it is important to identify the various electric rate tariffs
that are made available by the electric utility. A critical means of accruing benefits is to determine
whether the smart grid infrastructure allows a building operator to achieve reduced power costs or
to participate in a utility program to earn rebates or incentives. Some rates may reduce power costs
without building operators taking further actions simply because smart grid infrastructure is in
place. For example, installation of thermal energy storage (TES) systems as a replacement for
other electric cooling systems at a facility that is already on a TOU rate will achieve energy cost
reductions by virtue of simple installation of the TES (see Section 4.6 for further information on
cool thermal storage). Another example is the installation of a PV array that produces power
73
74 | Strategies to Accrue Smart Grid Benefits
when the facility otherwise would naturally incur peak demand charges, thereby reducing demand
costs without further action. Review Chapter 3 for further details on rate design concepts and the
types of rates that might be made available from a utility.
As an example of taking advantage of rate offerings, if a major component of smart grid
investment for a certain building is installation of thermal ice storage systems, the building owner
or operator might elect to move their facility onto the utility’s optional TOU rate. This is because
the storage system will produce ice overnight, when the energy is cheaper on the TOU rate, and
thereby result in lower energy costs relative to a standard utility rate that does not have TOU
components.
5.2 DEMAND MANAGEMENT STRATEGIES

There are several strategies involving the smart grid that can allow a building operator to
reduce power costs through demand charges. Demand management strategies are described fully
in Section 4.3 and include load shed, load shift, and load modulation approaches, as shown in
Figure 5.1. Load shedding involves reducing loads during peak demand hours. Load shifting
involves using methods that shifts energy consumption from peaking hours into off-peak hours.
Finally, load modulation represents methods to manage demand in very short time periods to pro-
vide ancillary grid services. The appropriate techniques to deploy will depend on the technology
in use and the electric rate options or utility programs in which the site is participating. Further
details on demand billing and utility programs are provided in Chapter 3. Demand management
strategies may also be constrained, depending on the technology deployed. For instance, load
shifting approaches might require management of the rebound effect (i.e., the increase in total
demand during the hour that load is shifted to), depending on the rate or utility program specifi-
cations. One strategy is to automate different groupings of controls and curtail and release the dif-
ferent groups at staggered times to effect longer demand reduction windows and manage rebound
effects. For further details on constraints on demand management strategies, refer to Chapter 7.
Refer to Section 4.3.2 for operational considerations with respect to demand management strate-
gies.
Another strategy for managing demand costs is to operate in island mode, wherein the building
functions independent of grid power. Island mode operations are discussed more fully in Chapters
6 and 9.
5.3 EFFICIENCY AND CONSERVATION INTERACTIONS

Although most energy efficiency and conservation initiatives would not fall under the smart
grid definition, pursuing efficiency and conservation in concert with deploying smart grid tech-
nologies can help drive benefits further than just smart grid deployment. Facilities that encourage
efficient use of energy and behaviors aimed at conserving energy can not only lower total energy
usage but also can affect additional demand charge savings too. For instance, participation in a
demand response (DR) program using ADR systems can create demand cost savings for a build-
ing. Further savings could be achieved by educating and encouraging building tenants to behave
especially efficiently during DR events to achieve a larger overall demand reduction. An example
of such behavior might be encouraging office workers to turn off lights during DR events if suffi-
cient natural lighting is available. DOE has a primer on energy efficient commercial buildings
here: https://www.energy.gov/eere/videos/energy-101-energy-efficient-commercial-buildings.
Figure 5.1 Depictions of demand management approaches.

Source: DOE (2019)
5.4 SUPPLYING ELECTRICITY TO THE GRID

If a building installs on-site generation, the potential to supply energy to the electric grid
exists and thereby represents a potential source of benefit. Interconnecting with the grid requires
meeting the utility’s interconnection requirements and may require getting the generator certified
as a qualifying facility (QF), which can represent an additional cost to the owner of the generator
(see Section 4.2). Furthermore, utilities may require insurance be carried on the generator. How-
ever, these costs should be weighed against the potential benefit of selling power to the electric
utility when the generator produces more electricity than is needed to meet demand for the build-
ing. The energy transaction between the utility and the customer can take on several forms, as
described in Section 3.3.3. However, it is almost always most beneficial to the customer to offset
energy that would otherwise be purchased at a retail price from the utility. Therefore, the goal of
generation should always be to offset site electricity requirements first before selling power to the
utility through the grid. Depending on many factors, including the type of generation and utility
rates and policies, one cost effective option might be to couple on-site generation with electric
battery storage (see Section 4.5.1 for further details). The battery can then be discharged to offset
peak demands or to meet on-site electricity requirements during times when generation is low or
nonexistent. For instance, a PV system might be large enough to not only meet electricity demand
during daylight hours, but also generate enough additional power to either sell to the utility or
charge a battery. Charging the battery to offset electricity use when the sun is not out might be a
better economic decision than selling the power to the utility. Having grid interconnection also
enables a building with on-site generation to take advantage of possible future transactive energy
markets more quickly in the future.
5.5 STRATEGIC ADDITION OF INCREASED ENERGY USAGE
When situations warrant increasing needs for electric power at a building, it is important to
consider strategically adding that load to the extent possible. New loads should be considered in
the context of the broader smart-grid plan, with emphasis placed on understanding electric rates
(see Section 3.3 for details on electric utility rates). If load can be added to meet the needs of the
building without increasing billing demand charges, that should be considered in addition to
operational considerations (for example, if shifting load to the night requires adding or expanding
a third shift, it may not be cost effective to do so). Additionally, consider whether the energy can
be added to less expensive off-peak hours under a TOU rate or if there are equipment options that
76 | Strategies to Accrue Smart Grid Benefits
perform the same function but allow more control of timing of energy usage. For instance, install-
ing a smart appliance with advanced controls may be preferable to a standard piece of equipment.
Finally, also investigate whether utility programs (energy efficiency, conservation, demand
response, or beneficial electrification programs) are available that might create additional value
associated with the new load.
5.6 SOLAR GENERATION AND ACCESS TO FINANCING

Orange Button, formally known as Solar Bankability Data to Advance Transaction and
Access, is a project by SunShot, which is a program run by DOE. SunShot aims to increase access
to solar data in hopes of promoting solar energy in the U.S (SunShot n.d.). Before the launch of
Orange Button, solar data frequently came from a multitude of sources, and often the data was of
different formats, quality, and subject matter. These discrepancies often led to inaccuracies, confu-
sion, and redundancies. SunShot launched Orange Button in an effort to create a platform where
users who are not as knowledgeable in the background and implementation of solar energy can
access more accurate and standardized data. The Solar Data Translation Platform is a cloud-based
software used by the project that can handle different file types to standardize and format data.
Many utilities often have an Orange Button graphic on their apps, software, or websites, so that
those who are interested in securing this data can simply click this graphic and gain access to
Orange Button formatted data. With correct, easily understandable data, people looking to
develop solar energy projects can now adequately prepare themselves with valuable and helpful
information about the relative successes of other solar projects.
The Orange Button project partners with numerous organizations across the industry provid-
ing data on a variety of subject matters. One such organization is the SunSpec Alliance, a solar
trade organization of over 100 solar and storage distributed energy industry participants. This
organization handles data sets that target finance, feasibility, design, operation, and construction
of a project. The National Renewable Energy Laboratory (NREL) is another partner helping to
develop a data exchange platform that connects the solar industry to further enhance the type and
quality of the data available to regular users. Providing this type of information is how Orange
Button reduces a user’s soft costs, which are the costs that are not directly related to construction.
Often, soft costs are used to describe pre- or post-construction expenses, such as business and
technical consulting, legal fees, and training. A user’s access to this kind of data provided by
Orange Button’s partners can be pivotal in reducing soft costs, enabling the user to be more self-
sufficient.
For financial institutions, Orange Button provides standardized data formats, which makes it
easier for banks to evaluate solar projects and to thereby fund and manage such projects. There-
fore, use of Orange Button data formats can allow a building owner or designer to have better,
easier access to funding or approval for funding from financial institutions.
5.7 PROVIDING ANCILLARY SERVICES

In some instances, a facility might be compensated by a utility or grid operator for providing
ancillary services, such as frequency control or providing reactive power. For some ancillary ser-
vices, aggregation may be required to generate enough service to receive payment. For example,
electric battery storage systems can provide frequency regulation (see Section 4.5 for further infor-
mation on battery storage). Another example is advanced inverters, which can provide reactive
power to the grid (see Section 4.7). Chapters 3 and 8 also discuss ancillary services.
5.8 MICROGRID STRATEGIES

Described more fully in Chapter 9, microgrids are essentially a group of interconnected loads
and DERs that can connect and disconnect from the electric grid. Microgrid arrangements can
provide several benefits to a building owner or operator, including:
• Ability to export excess generation to the grid for payment,

• Prioritization of loads to prevent local grid collapse when sufficient power is not available
(e.g., during a grid outage and when on-site generation is not sufficient to meet all load
requirements),
• Ability to provide backup power for longer periods of time than a traditional backup
generator,
• On-site generation can produce thermal energy to allow for development of CHP systems.
Operational and design considerations for microgrids are more fully discussed in Chapter 9.
TECHNOLOGIES—
Maintaining Building Functions
During Interruption Events
Why This Chapter is Important

• This chapter defines resilience and reliability with respect to building electrical func-
tionality.
• This chapter discusses ways to maintain building functionality when grid power is
unavailable due to a power failure or due to responding to interruption events as part
of a smart grid strategy.
Resilience and reliability are becoming increasingly important to new buildings and buildings
being upgraded to operate well into the 21st century. Resilience is defined as the ability to prepare
and plan for, absorb, recover from, and more successfully adapt to interruption events. Building
functions may be adversely affected by natural events such as flooding, precipitation, fire, storms,
or extreme hot or cold temperatures. They may also be affected by man-made factors such as
cybersecurity breaches. Reliability with respect to electrical functionality in a building is related to
the number of power outages, outage times, and recovery times. A more reliable power infrastruc-
ture will have fewer and shorter outages and will recover more quickly than a less reliable infra-
structure
This chapter will focus on the design elements, technologies, and processes that ensure build-
ing functions are maintained during interruption events, specifically in the context of their inter-
action with the smart grid. It will discuss the current best practices that lead to increased building
resilience and system reliability. It will then specifically address how smart buildings may be
designed to operate during periods when the grid is down. The chapter will conclude by outlining
the various ways in which facility operators interact with smart grid technologies during power
interruptions.
6.1 RESILIENCY
Resiliency is a key factor in maintaining building functions during interruption events. New
buildings can be designed with resiliency in mind, and there are many emerging certifications and
ratings for resilient buildings. Older facilities can still improve resiliency and work toward being
better prepared in a power outage.
79
80 | Maintaining Building Functions During Interruption Events
6.1.1 Resiliency and Adverse Events

Resiliency of a building, facility, or microgrid is key to continuing normal operations during
utility grid interruptions or other adverse events. In new construction, this may be easier to incor-
porate into the design phase, but in existing buildings and facilities requiring retrofit incorporat-
ing resilience may require more effort. Resiliency may be desired for many reasons including
providing critical services that require power, adherence to codes, geographic location that is
prone to power interruptions, requirements that necessitate more on-site generation and/or
renewable power generation, or a desire to become an independent microgrid, also discussed in
Chapter 9. With the aging infrastructure, including above ground power lines and at capacity
power grids, prolonged and more frequent outages are more commonplace. This is especially the
case in areas where the existing infrastructure has exceeded its useful life, such as the U.S.’s east
coast. The U.S. power grid was given a grade of D+ in the 2017 ASCE Infrastructure Report
Card, which states: “Without greater attention to aging equipment, capacity bottlenecks, and
increased demand, as well as increasing storm and climate impacts, Americans will likely experi-
ence longer and more frequent power interruptions” (ASCE 2017). These infrastructure concerns
mean that the overall grid is more susceptible to adverse events. Adverse events and interruption
events may include:
• Sudden Catastrophe.
• Natural disasters that could affect the grid such as hurricanes, tornadoes, blizzards, ice
storms, wildfires, earthquakes, and flooding are often unpredictable in duration and
effect. Depending on location some of these may not be a concern, but with increasing
frequency natural disasters are becoming more powerful and reaching outside normally
accepted geographical locations.
• Man-made disasters and events that could potentially affect the grid include man-
made earthquakes, transport accidents, factory explosions, man-made fires, as well as
technological attacks. With the increasing digitalization, interconnectedness, and the
Internet of Things (IoT), utilities and facilities are at increased risk of hacking, phish-
ing, and losing control of their systems via Internet threats or electronic viruses.
• Long-Term Trends.
• Climate change could continue to increase global temperature, warm the oceans,
shrink ice sheets, melt global glaciers, increase sea levels, and affect natural disasters in
various areas (NASA 2019). Increasing global temperatures would put more stress on
the existing grid system during peak periods.
• Fossil fuel availability may become an issue for areas reliant on the fuels for heating
and/or power generation. Many areas of the U.S. are already constrained by existing
infrastructure and are experiencing shortages of fossil fuels during high use periods
and increased consumer costs (ISO NE n.d.). This is true of the northeastern U.S.,
where natural gas has become the predominant power generation fuel but there is
inadequate infrastructure to transport the gas as needed during high-use periods.
Catastrophic events and long-term trends contribute to short-term and long-term impacts to
the reliability of the grid system overall. Short-term impacts include minor power outages,
increased prices during periods of high usage, and increased need for demand response and peak
demand reduction programs. Utilizing islanding during peak demand periods can help reduce the
electricity cost to the microgrid from the utility, providing the microgrid responds to the request
to curtail use or go into islanded mode (see Chapter 9 for more information on microgrids). Long
term impacts are usually felt after catastrophic events and include widespread system failure that
requires in depth and long term rebuild. Incorporating islanding, or microgrids, into facility plan-
ning can help to lessen some of the long term impacts of power outages. Trends show that dura-
tion and frequency of power outages is increasing overall, as well as overall geographic distribution
with larger areas affected simultaneously during storms and other widespread adverse events.
On-site generation may fail or not meet all demands during an interruption event, so it is
important to incorporate passive solutions for buildings and occupants to survive catastrophic
events. Generators are not typically designed to operate for extended periods of time, so incorpo-
ration of passive and active solutions will extend the time a facility can operate during an outage.
Examples of passive and active solutions include:
• High-performance building envelope. A high-performance building envelope will perform

better during power outages. A poor performing building shell will contribute to quicker loss
of conditioned temperature within a facility.
• Operable windows (i.e., ventilation in case of emergency). Operable windows will allow for
ventilation during outages when air handling equipment may be inoperable. They also help to
increase indoor air quality.
• Cool roof. Depending on the geographic location a cool roof can reduce cooling requirements
and slow the increase of temperature in a facility during an outage. Cool roofs are best used in
hot, cooling-dominated climates.
6.1.2 Measuring Resiliency
The Resilient Design Institute states, “Resiliency is not any single solution, concept or per-
spective” (Resilient Design Institute n.d.). Resiliency can be measured as “redundancy, adaptation,
diversity, durability, life safety, renewable systems, natural resources, and social equity” (Liu and
Leed 2019). Every entity will have a different perspective on acceptable functionality or adapta-
tion to a wide range of adverse events. It is up to the building owner to determine the primary
resiliency goals for the engineers and architects to base their design upon. Threats and vulnerabil-
ities should be analyzed against counteractive measures with consideration to cost-effectiveness of
the solutions. Building owners will identify key areas needed for resiliency e.g. lighting, tempera-
ture, indoor air quality, structural stability, resistance to flooding, etc. and work with designers to
best accommodate those requests within reason.
Begun in 2014, the REli Collaborative has developed a rating system similar to LEED with
an added emphasis on resiliency. While this rating is typically most helpful in new construction
the REli Action List and Credit Catalog is available to all and can be helpful in identifying resil-
ient approaches to building operations.
Additionally, the National Institute of Standards and Technology (NIST) has a number of
research projects and programs to address building and community resilience in the face of
adverse events and measure resiliency.1
Reducing overall energy usage in existing buildings, and designing new facilities to consume
less energy will be beneficial to overall resiliency and sustainability of the system. During inter-
1. www.nist.gov/topics/resilience
ruptions microgrids will be required to provide all power needed at the facilities, so reducing the
amount required reduces the equipment needed to produce it and prolongs the duration the
microgrid can operate without feed from the main power grid. For example, reducing the overall
usage of a building being considered for photovoltaic panels (PV) can reduce the required foot-
print of the panels, which can reduce cost to install and operate. Reducing overall energy usage
will also directly effect the required back up power generation and/or storage capacity require-
ments.
Designing for resiliency also requires consideration of local building codes and geographic
natural disaster possibilities. Typically, local codes will reflect the potential natural disasters of the
area but may lag many years behind advances in building technologies or best practices, and may
require a significant event to increase requirements, i.e., better flood protection after recurring
“100-year floods” or increasing required building protections after numerous high-level hurri-
canes. Flood protection, earthquake bracing, and strong glazing materials are examples of consid-
erations that should be given in various natural disaster zones. Consideration should also be given
to net zero energy buildings, solar-ready buildings, passive systems, passive heating/cooling,
LEED design requirements, and sustainable elements that could increase resiliency. Designs
should consider possible drought conditions, extreme heat, flooding, and other natural disasters.
An integrated design approach that addressed a high performance building with increased resil-
iency can meet the needs of all stakeholders through multidisciplinary technical planning, design
construction, and operations. Figure 6.1 outlines some key points in building for resiliency and
sustainability, including the intersection of these two factors. Resiliency and sustainability are not
mutually exclusive and both can be evaluated and buildings can be designed that can withstand an
interruption to the grid supplied power.
On-site generation is important to resiliency. If on-site generation cannot provide power for
the full facility, then consideration should be given to life safety needs and those loads prioritized
Figure 6.1 The intersection of resiliency and sustainability.

Source: ECHOtape (2018)
when on emergency power. If possible, multiple methods of on-site generation should be consid-
ered. Distributed energy resources such as CHP, PV, fuel cells, electric vehicles (EVs), and hydro-
electric power should be paired with battery storage and/or thermal storage for maximum
resiliency. Building controls can be used to maximize interaction of DERs and storage (see Sec-
tion 4.3 for information on demand management). There should be contingencies in place if
building controls are compromised. EVs that are on-site during an interruption should be consid-
ered for a potential DER if their stored power can be discharged.
Technologies that can be implemented into the design of smart buildings and the smart grid
and can help to provide more resilience to a building include advanced metering infrastructure
(AMI), data management software and systems, and smart equipment. AMI, also known as smart
meters, enable two-way communication between the meter and the supplier. Taking advantage of
AMI, if available, is beneficial for a smart building and the smart grid. AMI can aid the utility in
better outage response, reduce total number of affected customers, and improve service reliability
(DOE 2014b). Furthermore, in some instances, the presence of AMI at a site may enable build-
ing operators to have access to real-time site load data. Such data can be invaluable in understand-
ing electricity consumption patterns and developing smart grid deployment strategies. If AMI
metering is unavailable from the utility or data is not made available, installing on-site metering
equipment may be an option for a building professional. Data management is important in smart
buildings and maintaining operation during interruptions to the grid. Data collection is a key
component of a smart building. Managing and analyzing that data is key to proper operation.
During an outage, data-collection devices, occupancy data, and any DERs can be used to priori-
tize allocation if need be, evaluate output of generation assets, and curtail demand and/or usage to
operate under the generation profile.
6.1.4 Improving Resiliency
Redundancy is an important feature of resiliency and smart buildings. This is especially
important during an outage. Mechanical and electrical equipment can fail, and incorporating
redundancy to key components of the facility is essential to improving resiliency. As seen in Fig-
ure 6.1, multiple energy sources and water sources are important to consider. Improving overall
energy efficiency in an existing building is important to reducing overall load and lengthening the
time on-site DER can meet building energy requirements during outages. Multiple grid intercon-
nections can improve resiliency in smaller, more localized power outages. On-site generation and
grid design should also be considered, using a loop-type system for transmission versus a star-type
distribution from the generation sources can improve microgrid resiliency.
6.2 RELIABILITY
Reliability of facilities, backup generation, transmission, and other facility resources is import-
ant to resiliency and performance during an outage. Incorporating operation and maintenance
and reliability checks into the operation of a facility is important to maintain reliable operations.
6.2.1 Interconnected Microgrids
Microgrids can operate with and parallel to the utility grid as well as balance the generation
and demand within its boundaries (Kelly and Yan 2015). Microgrid controls located at the utiliza-
tion point makes them more efficient and maintenance easier. In microgrids the building owner is
responsible for maintenance and reliability, as opposed to the operation of the main power grid.
More details on connectivity and capabilities of microgrids can be found in Chapter 9. Also,
depending on the size of facility, incorporating multiple points of connection to the main electri-
cal grid could be a benefit during a small-scale outage wherein power could be shifted to another
connection point without using full microgrid capability. However, this does required sophisti-
cated switch gear and interconnectors.
6.2.2 Backup Power Generation
Traditional sources of backup power generation are typically oversized, and not designed to run
for long periods of time. Diversification of backup power generation will increase resiliency and reli-
ability of systems if the facility is not just relying on a typical diesel generator. PVs can be a viable
source of power generation during daylight hours, but to provide reliable power generation during
times when the sun is not shining, the PVs must be paired with a DER such as batteries.
6.3 OFF-GRID OPERATIONS
In island operation, or off-grid operation, DERs provide all the available energy to the facility
or microgrid. DERs are explored in depth in Chapter 4. There are many considerations for off-
grid operations. Demand management must be considered if the backup generation cannot meet
normal demand, or if some assets can be deployed to reduce demand. Off-grid design consider-
ations should be incorporated during the design phase. Operational considerations should be
planned in new construction and should be considered and prioritized when planning off-grid
operations in older buildings. Energy storage and discharge is a key consideration. Safe operation
of microgrid distribution system and circuit protection should be used.
6.4 RESPONSIBILITIES AND ACTIONS OF BUILDING OWNERS
Building owners and operators are the first line of defense during a power outage. Critical sys-
tems must be identified, DERs allocated, and response plans implemented to maintain building
operation. Smart buildings are even more reliant on power for interconnectivity and proper oper-
ation. Operation during an outage will depend on building operations and infrastructure.
Backup generation will also be directly effected by the building usage and requirements. Hospitals
have very different requirements during outages than office buildings, and each building operator
will need to evaluate their facility needs. Operations that are typically not considered strictly elec-
tric, such as water and sewer, should not be overlooked when preparing for interruption. Equip-
ment that requires fossil fuel, such as water heaters, kitchen equipment, and heating equipment,
will also need to be evaluated for resiliency and possibly dual fuel operation in times of fuel short-
age or power interruption.
6.4.1 Emergency Response Plan
A comprehensive emergency response plan will minimize disruption during an outage. This
should be fully documented, revised regularly, and practiced annually. It would also be helpful to
revisit the plan as part of the onboarding process for new employees as they may come onboard
outside the typical drill period. Communication should be evaluated for the emergency response
plan and communication methods other than cellular technology and/or Internet communication
should be incorporated into the plan. In incorporating power outages and resiliency into an emer-
gency response plan, seasons should be considered, as different actions may need to be taken in
the summer versus the winter. The response plan should also incorporate line diagrams of the
electric grid system, DERs, and shutoff points for key equipment. Location of manual controls
for all smart systems in the building should be noted in case of loss of Internet, power, and so on.
6.4.2 Operation and Maintenance

Regular operation and maintenance (O&M) will ensure that equipment is operating as
expected and minimize surprises during an outage. This is especially important for life, safety, and
emergency equipment such as generators and transfer equipment. NFPA 110, Standard for Emer-
gency and Standby Power Systems (2019) covers performance requirements for emergency an
standby power systems and is a good resource for O&M planning. Building owners should defer
to manufacturer-recommended preventative maintenance items specified for installed equipment.
Maintaining replacement parts for critical equipment will reduce downtime after an interruption
event.
6.4.3 Energy Efficiency
As noted previously, reducing the overall usage and demand of a facility should be the first
step in resiliency and can provide long term benefits. Cost-effective energy efficiency projects will
reduce energy costs and allow back up generation capacity to be reduced accordingly. Addition-
ally, in some cases retrofitting or replacing old equipment with newer technology may allow use of
alternate methods of power supply. Lower wattage lights, for example, may only require a trickle
charge battery backup as opposed to full line voltage reducing the load on the backup generators.
Reduction in energy use will result in longer off-grid runtime. Energy efficiency can increase
overall building resiliency as well by reducing building roof loads in equipment or storage located
on roofs.
TECHNOLOGIES—
Constraints on Ability to
Deploy Strategies
When developing an operational plan for smart grid elements to maximize the value of
the technology, it is important to understand the possible limitations different technologies
or building systems may present. In this chapter, the guide will discuss factors to consider
that could constrain the amount of benefit derived from smart grid systems or specific smart
grid technologies. Topics will include:
• access to and timeliness of information;

• operational characteristics of the technology (e.g., seasonality, ramp rate at start-up, and so on);
• timing concerns of dispatch, including length of load deferral and rebound effects;
• power quality; capabilities of on-site technology and controls;
• the level of automation available versus human interaction with controls and systems; and
• other issues to consider.
These constraints should be identified and well understood when designing a smart grid deploy-
ment strategy.
This chapter will first define the various potential constraints that should be considered
when designing a plan to operate smart grid technologies to accrue benefits. Then, it will
provide a recommended process for evaluating whether constraints will affect deployment
strategies.
7.1 POTENTIAL CONSTRAINTS TO CONSIDER
• This section catalogs the various factors that might constrain a smart grid deployment
strategy.
• Building professionals should consider each possible constraint and determine if it
impacts their specific situation.
In designing a deployment strategy for smart grid systems in a building or across a campus of
buildings, it is important to understand the several informational, programmatic, technological,
and other aspects of the specific smart grid systems. There are several factors which could limit
87
88 | Constraints on Ability to Deploy Strategies
the amount of benefits accrued through deployment strategies. This section will define the vari-
ous factors that could create constraints for deployment strategies.
7.1.1 Information and Communications Factors
Four different potential constraints can be categorized as informational or communicative in
nature.
7.1.1.1 Availability of Information from Smart Grid Systems. For many of the sources of
benefits available to owners and operators of smart grid systems, as described in Chapter 4, timing
is critical. To avoid high peak demand and associated demand charges, a building must often have
the systems in place to anticipate a potential demand event and activate smart grid systems in time
to successfully reduce loads during peaking hours. The issue becomes even more difficult when
trying to manage NCP demands. Therefore, the amount, type, and timing of the information
smart grid systems provide to a building operator can enhance or limit the ability to accrue bene-
fits.
Key components of the smart grid infrastructure to review for informational capabilities are
inverters for solar panels (advanced inverters provide digital two-way communications and make
granular data available to the utility and the building operator, which is likely to be necessary to
provide power factor value or other grid interactive benefits; see Section 4.7 for more on advanced
inverters) and the presence of metering information. Utilities that have installed interval utility
meters may or may not share interval data with customers. It is important to understand what
information can be provided by the utility. Another source of load information might be energy
management systems or submetering systems put in place throughout the building. Smart appli-
ances can also be a source of key operational information. For instance, smart thermostats have
application programing interface (API) platforms and can provide a wealth of information about
temperature set points, compressor run times, and other information. Utility demand-side man-
agement (DSM) programs might also provide software to a participating customer that gives the
building operator access to important information. An example of such a situation is provided in
the following paragraphs.
An interesting example is of a high school that participated in a DR pilot program with a util-
ity. One incentive for participation was that a software portal was made available to the high
school’s operations managers that provided two-way communications between the utility and the
facility. The portal provided the operator with near real-time data showing the school’s electricity
consumption in two-minute intervals. The school was billed on NCP demands and the operator
sought to use the interval data available to him to understand load patterns at the school and
begin to mange peak demands during the school year. He learned how various pieces of electric
equipment contributed to demands throughout the day and began to understand peak day pat-
terns. For instance, in late September when school was in session and air conditioning load was
still contributing to demands, the operator noted that air conditioning and kitchen start-up loads
coincided in the morning. By adjusting the schedule, the operator was able to control NCP
demands and save on power bills. Although such demand management can be accomplished
without smart two-way communications equipment, in this example, the smart grid components
enabled the access to information needed by the facility operator to better understand the school’s
load usage characteristics.
Figure 7.1 shows the average weekday load in late September in the year prior to having access
to real-time load data and the year after in this example scenario. Through use of automated real-
time data and the ingenuity of an active and resourceful facility operator, the school was able to
Figure 7.1 Example of high school demand management making use of automated controls and
access to real-time load data.
reduce NCP demands by 20%. The operator identified the morning start-up of rooftop units
(RTUs) at 5:00 a.m. and the kitchen start-up at 6:00 a.m. as key drivers of demand, along with
the lunch rush. In response, the HVAC morning start-up was moved earlier in the day and then
set back when the kitchen started up (this was noncontrollable). Similarly, in the middle of the
day, several noncritical RTUs and make-up air units were shut down to mitigate demand spikes
caused by the lunch rush. This example shows how a customer might enhance their ability to
accrue benefits, but not having access to real-time load information would have likewise con-
strained this customer from achieving greater demand reductions.
7.1.1.2 Amount of Time Provided by Utility for Interruption Notices. As described in
Chapter 3, there are various utility-provided programs in which the utility provides a notice to
participants to curtail or limit demands. If a building is to participate in such programs and accrue
benefits by participating, it is important to know how much notice will be provided by the utility
and the communication means by which notice will be given. The lead time for an interruption
event can vary from near-real-time (e.g., five minutes notice) to day ahead. Some utilities may
offer greater incentives for the ability of a building to reduce demands with shorter notices. How-
ever, if a building cannot reduce demand within the notification period, the ability of an operator
to take advantage of those incentives is constrained.
It should be noted that electric pricing schemes would also fit in this constraint category. If a
building participates in a CPP rate, it is important to understand the amount of notice the utility
will give before a critical peak day. An example of rate offerings with different notification levels is
Georgia Power, which offers two tiers of RTP rate alternatives (see Section 3.3.2 for a definition
of RTP and CPP rates). Georgia Power offers a day-ahead RTP tariff and an hour-ahead RTP
tariff. If a building owner or operator is considering participating in the hour-ahead program, the
building operator must determine whether appropriate actions can be taken to avoid a high hourly
price given 60 minutes of notice and anticipate whether prices may stay high for several hours.
7.1.1.3 Length and Timing of Deferral. When a building is trying to limit load for short
durations of time to reduce a demand to achieve benefits through reducing an NCP or CP
demand or by participating in a utility-led program, it is important to understand the length of
deferrals. Longer deferrals may constrain the amount of demand a site is able to reduce during an
interruption event. For example, the amount of load displaced by discharging a battery or by
cycling air conditioners will be constrained to relatively short interruption events due to techno-
logical and human factors. Such strategies might be most effective for two to four hours, since
batteries are typically only sized to meet the load for two hours and temperatures tend to drift
outside of comfort zones within two to four hours. However, running a gas-fired generator during
an interruption event is reliable and can continue for many hours if the fuel cost versus benefits
from the interruption remain cost-effective.
The limitation that a long deferral may have on reducing loads can also be impacted by the
timing of the deferral and how the facility is used. For many utilities, summer peaks occur during
the hours of 4:00 p.m. to 7:00 p.m., when businesses are still generally operating but residential air
conditioning is running for the return of occupants. A commercial office building with traditional
9:00 a.m. to 5:00 p.m. schedule of tenants might not have as much difficulty deferring load
between 4:00 p.m. and 7:00 p.m., since many workers may have left the building by the end of the
event and comfort is not as great a concern as earlier in the day. However, a manufacturing facility
running three shifts with a key process scheduled for 7:00 p.m. may have greater difficulty limit-
ing demand during the same window. Another example is if a DR event occurs in the range of
6:00 a.m. to 8:00 a.m. (a time when many utilities peak during the winter), in which case an office
building could preheat the building before the event and allow the thermal mass of the building to
retain enough of the heat to keep spaces comfortable until the deferral window is over.
7.1.1.4 Level of Automation. The level of automation available for the deployment strategy
is an important consideration. Some strategies to control demand involve a combination of auto-
mated controls and manual actions. Human interaction tends to be slow and error-prone, which
can greatly constrain the amount of benefit derived from a deployment strategy. However, that is
not to say that manual components should not be included in a plan to achieve incremental bene-
fits from automated smart grid components in the building. Rather, in designing such a plan, the
designer and building operator should understand how human elements can enhance and con-
strain effectiveness even of automated systems. For instance, controls may be designed to cycle
air-conditioning loads during interruption events. However, local site maintenance personnel may
be more concerned with avoiding complaints from tenants or workers on site and will override an
air-conditioning control event quickly, thus diminishing the load impact of a full cycling period.
7.1.2 Technology Factors
Quite a few factors are identified below which derive from the specific technology being
deployed that might represent constraints on ability to accrue benefits. It is important to under-
stand these factors for all components of the smart grid and for any and all deployment strategies
under consideration.
7.1.2.1 Seasonality of Loads. The seasonal patterns of the load to be curtailed and of the
equipment being deployed to accrue benefits should be understood. If a utility provides benefits
only for summer demand reductions, then winter end-use equipment would be constrained in
their ability to produce benefits. Likewise, the amount of benefit may vary by season. For exam-
ple, a solar panel is likely to produce more electricity in the summer when sunlight is more preva-
lent, or a micro wind turbine may produce more energy during windy seasons of the year. Another
example is that electric thermal storage solutions produce benefits by displacing demand caused
by heating or cooling equipment. Therefore, an ice storage system is intended to displace tradi-
tional cooling loads in the summer and can therefore not be counted upon to produce a winter
demand benefit. Likewise, a thermal storage heating system that is designed to displace electric or
gas heating loads during winter days can provide a winter demand benefit but not a summer
demand benefit.
7.1.2.2 Within-Day Timing of Loads. Understanding equipment loading throughout the day
is also important for developing a deployment strategy. For instance, if a building considering
incorporating EV capabilities into a deployment strategy is an office complex with most tenants
on site only during regular business hours, then it will be difficult to take advantage of an over-
night off-peak TOU tariff. Likewise, as described in the example above, knowing the timing of
equipment start-ups and warm-up times can help generate a typical pattern of loads throughout
the daytime.
7.1.2.3 Amount of Load and Energy Available to Dispatch. It is important to thoroughly
understand the amount of load that a particular building can dispatch during an interruption
event. For example, providing energy to the grid from a solar-generating unit can only be accom-
plished by having times when load requirements within the building are completely met by the
DER with some additional generation still available to send to the grid.
7.1.2.4 Ramp Rate and Response Time of Equipment. The amount of time it takes to get full
production from the equipment included in a deployment plan is important to understand. Even
components that are not typically considered to be a part of the smart grid should be understood
if they are included in the plan. Knowing how quickly the system can respond allows for appropri-
ate design of strategies to maximize savings on utility bills. For example, if it takes 20 minutes to
get a DER up and running to full capacity, then the program design should not assume a full hour
of benefit in the first hour, rather 40 minutes of benefit should be assumed.
7.1.2.5 Rebound Effects. Rebound effects are critical to consider and understand as part of
designing a deployment strategy, especially if the strategy is to manage NCP demand. Rebound
effects (sometimes called snapback) is the phenomenon of load spiking after an interruption event
as equipment that had be deferred comes back online. For example, Figure 7.2 shows a load pat-
tern for controlling multiple air conditioners through a smart thermostat temperature setback
strategy. During the time of control, loads drop significantly as shown on the solid blue line. The
dashed orange line represents a “baseline” estimate of what load would have been had there been
no temperature setback event. Once the smart thermostat adjusts the temperature setting back to
normal at hour ending 19:00, however, the air-conditioning units will run to restore the indoor
temperature, causing the rebound in load seen in the figure. Rebound effects can cause new peak
demands, especially if a lot of equipment is being controlled and released at the same time, or if
equipment is released at the same time other noncontrolled equipment is running at high
demand. All the NCP demand savings can be erased in a month by a single rebound event.
Figure 7.2 Example load curve of a control event with rebound effects.
Therefore, the potential for rebound of the components being deployed is an important constraint
on the ability to accrue benefits.
7.1.3 Other Factors

The following parameters are also important to understand as potential constraints on deploy-
ment of the smart grid to accrue benefits.
7.1.3.1 Cost to Deploy versus Benefits Available. A thorough understanding and accounting
of the various benefits and costs associated with a particular strategy should be developed. There
may be benefits that can be pursued, but it may cost more than the value of the benefits to achieve
those benefits. For instance, if using a diesel generator to create savings under an RTP rate struc-
ture, the cost of the fuel per hour of runtime should be the determining factor in whether to gen-
erate to avoid certain electricity costs.
Likewise, the incentive structures for providing demand reductions during DR events can
impact how a facility manages demand. For example, some programs pay the participant for
whatever demand reduction they achieve. Other programs pay for meeting a previously agreed
upon commitment and penalize the customer for failing to meet that commitment. An operator
may be willing to draw energy from an energy storage system at a faster rate in the first scenario
than in the second scenario. In the second scenario, if the operator exhausts the energy storage too
soon, they could start violating their commitment and the penalties could quickly add up to more
than the DR earnings.
7.1.3.2 Time, Personnel, and Budgetary Constraints. All operating plans are constrained by
these factors. The same will be true with smart grid deployment, although, once the investment in
smart components are made, the need for time and money is much lower on an ongoing operating
basis for most pieces of equipment.
Figure 7.3 Hourly load curves for price manipulation example.
7.1.3.3 Market Manipulation. Building owners and operators need to avoid implement-
ing DR strategies that could be construed as price manipulation. DR strategies that may be
perfectly reasonable in one scenario can be illegal price manipulation in a different scenario.
There are several famous examples of groups developing what they considered to be a clever
strategy for earning a few tens of thousands of extra dollars in DR revenue. Instead they
found themselves facing millions of dollars in fines for violating FERC’s Anti-Manipulation
Rule (for information about FERC’s Anti-Manipulation Rule, visit https://www.ferc.gov/
enforcement/market-manipulation.asp).
Here is an example of a DR strategy that might be perfectly acceptable in one situation,
but illegal in another. Figure 7.3 shows the demand for electricity at a facility. The blue bars
represent the typical weekday demand while the red bars represent the demand on a day when
a DR event is occurring between 2:00 p.m. and 6:00 p.m. The grid operator announced the
day before that a DR event would be going on during these hours. The facility operator
increased their demand on the morning of the DR event and then decreased it during the
actual DR event. They might have done this by shifting some of the afternoon production to
the morning, by creating ice in an ice storage system in the morning and then using that ice
to cool the facility in the afternoon, or by some similar means of shifting demand. Total
energy consumption for the day is identical in both cases. Is there illegal price manipulation
going on? The answer would probably depend on how the grid operator or utility determines
whether the facility responded to the DR event and how the payment for the response to the
DR event is calculated.
Suppose the grid operator looks at the average demand for the five weekdays before the
DR event in order to establish the baseline used to measure compliance. In that case, the blue
bars would also represent the baseline, and the grid operator would say that the facility did
indeed reduce their demand during the DR event.
Suppose the grid operator looks at the demand during the DR event and says that it must
not exceed 100 kW. The grid operator would say that the facility did indeed limit their
demand to no more than 100 kW during the DR event.
On the other hand, suppose the grid operator looks at the hour immediately before the
DR event in order to establish the baseline used to measure compliance. This would mean
that the red bar at 1:00 p.m. would be the baseline against which the 2:00 p.m., 3:00 p.m.,
4:00 p.m., and 5:00 p.m. bars would be measured. It would look like the facility had an 80
kW demand reduction during each of these hours. FERC would quite possibly rule that
prices were being manipulated since the 1:00 p.m. red bar was made to be artificially higher
than what it would have been had there been no DR event. This would have made it appear
that the demand reduction during the hours of the DR event were larger than what they
really were relative to a normal day.
If building owners, operators, and equipment installers are uncertain whether their pro-
posed DR strategy is allowable, they would be advised to discuss it with the grid operator or
utility that is running the DR program.
7.2 PROCESS FOR EVALUATING WHETHER CONSTRAINTS

WILL AFFECT DEPLOYMENT STRATEGIES

• This section helps develop a framework for understanding deployment strategies and
identifying which constraints may impact that strategy.
Along with the various sections of the guide thus far, a building operator, designer, or owner
can work through a series of steps to fully understand how smart grid components can be used to
achieve benefits and to identify potential constraints to deployment strategies. Figure 7.4 provides
an overview of the steps one might take to fully understand everything necessary to develop a
comprehensive strategy to deploying smart grid systems in a building to achieve the most benefit
possible. Each step is accompanied by a reference to pertinent sections of the guide that cover the
information in more detail.
Figure 7.4 Process for developing smart grid deployment strategy given constraints.
BUILDING DESIGN
CONSIDERATIONS
With changing utility rate and delivery structures and increasing BTM DERs, commercial
buildings need to adapt to the smart grid by providing DR and ancillary services, and there is
great potential to do so. Building designers need to understand and incorporate strategies that
allow buildings to not only directly interact with the grid but also integrate DERs to achieve max-
imum benefit (NBI 2019). In this chapter, current smart grid and DR-related building codes and
standards are introduced. Then, different automated demand response (ADR) strategy models or
demand-side ADR infrastructures that allow a commercial building to interact with ADR signals
from a local utility or grid operator are summarized. Building owners, designers, and energy man-
agers should be familiar with the local regulatory requirement (discussed in Chapter 2) and their
utility’s DR program (discussed in Chapter 3) before deciding on an appropriate demand-side
ADR infrastructure. Next, the most common building-to-grid communication protocols are dis-
cussed to provide different options for building owners and designers. Finally, design consider-
ations for building system components (e.g., the electrical system, the lighting system, and HVAC
equipment) to communicate and respond to ADR signals, either directly or through a BAS, to
provide grid services are discussed.
8.1 BUILDING CODES, STANDARDS, AND LEED®

• Designers need to follow building codes and standards in designing commercial
buildings.
• Building owners and designers need to know relevant LEED points when pursuing LEED
certification.
Building codes specify minimum requirements for the construction of buildings. In this sec-
tion, recent development and advancement of the new building energy codes and standards that
are relevant to on-site renewable systems/generation, DR, advanced metering, and EVs are sum-
marized. Building owners and operators need to know which particular version(s) of codes and
standards are relevant to them. The codes and standards vary by state and local ordinances and are
typically updated on a three-year cycle.
97
98 | Building Design Considerations
8.1.1 2018 International Green Construction Code® Powered by ANSI/

ASHRAE/ICC/USGBC/IES Standard 189.1-2017 (IgCC/189.1)
The 2018 International Green Construction Code® Powered by ANSI/ASHRAE/ICC/
USGBC/IES Standard 189.1-2017 (IgCC/189.1) is the third edition of the IgCC. In 2015, the
International Code Council (ICC) and ASHRAE partnered in the development of this new ver-
sion of the IgCC sponsored by the American Institute of Architects (AIA), ASHRAE, ICC,
Illuminating Engineering Society (IES), and the U.S. Green Building Council (USGBC). The
previous two editions (2012 and 2015) were developed using ICC’s code development process as
part of the ICC family of codes. As part of the partnership with ASHRAE, the responsibility for
code provisions is now split between the ICC and ASHRAE processes. ICC is responsible for
Chapter 1, “Scope and Administration.” ICC coordinated the technical provisions developed by
ASHRAE with the provisions in Chapter 1 of the 2015 edition of the IgCC. The remainder of
the code is the technical content based on the provisions of the 2017 edition of ANSI/ASHRAE/
ICC/USGBC Standard 189.1.
IgCC/189.1 is the latest version of ASHRAE Standard 189.1, Standard for the Design of High-
Performance Green Buildings Except Low-Rise Residential Buildings. It includes the complete tech-
nical content of the 2018 IgCC. One of the purposes of this standard is to “provide minimum
requirements for the siting, design, construction, and plans for the operation of high-performance
green buildings to enhance resilience to natural, technological, and human-caused hazards” (ICC
2018). In the “Energy Efficiency” chapter, the standard contains mandatory provisions that apply
to on-site renewable energy systems, energy consumption management, and ADR. This chapter
also describes prescriptive options for on-site renewable energy systems, building envelope,
HVAC, service water heating, power, lighting, and other equipment. The mandatory provisions
must be met in all cases, along with either the prescriptive options or corresponding performance
options. Smart-grid-related requirements, quoted from IgCC/189.1, are summarized below (ICC
2018):
Mandatory Provisions—On-Site Renewable Energy Systems:
• Building design “shall show allocated space and pathways for future installation of on-
site renewable energy systems and associated infrastructure that provide the annual
energy production equivalent of not less than 6.0 kBtu/ft2 (20 kWh/m2) for single-
story buildings and not less than 10.0 kBtu/ft2 (32 kWh/m2) multiplied by the gross
roof area in feet squared (meters squared) for all other buildings.” A few exceptions
may apply. Please refer to the standard for details.
Mandatory Provisions—ADR:
• Buildings “shall contain automatic control systems that have the capability to reduce
building equipment loads to lower electric peak demand of the building. The building
controls shall be designed with DR infrastructure capable of receiving automated DR
requests from the utility, electrical system operator, or third-party DR program pro-
vider and automatically implementing load adjustments to the HVAC and lighting
systems.”
• HVAC systems “shall be programmed to allow centralized demand reduction in
response to a signal from a centralized contact or software point” with specific require-
ments.
• HVAC equipment with variable-speed control “shall be programmed to allow auto-

matic adjustment of the maximum speed of the equipment to 90% of design speed
during automated DR events.”
• A centralized lighting control system, if present, “shall be programmed to allow auto-
mated DR. The programming shall reduce the total connected lighting power demand
during a DR event by not less than 15% but no more than 50% of the baseline power
level.”
Prescriptive Options—On-Site Renewable Energy Systems:
• For the Standard Renewables Approach, the requirements are similar to those in the
Mandatory Provisions section. For the Alternate Renewables Approach, which uses
higher equipment efficiencies from Appendix B of Standard 189.1, on-site renewable
energy systems annual energy production requirements for the Standard Renewables
Approach can be relaxed. Please refer to the standard for details.
Performance Option:
• The annual energy cost index with consideration of renewables “shall be calculated in
accordance with ANSI/ASHRAE/IES Standard 90.1, Normative Appendix G, and
be equal to or less than the Performance Cost Index (PCI) Target” that is described in
the standard.
• “On-site renewable energy systems in the proposed design shall be calculated using the
procedures in Normative Appendix C” of the standard.
8.1.2 LEED v4.1

Leadership in Energy and Environmental Design® (LEED®) is a widely used green building
rating system available for nearly all building project types, from new construction to operation
and maintenance (O&M). Many building owners pursue LEED certification for their buildings
to increase their property value, market visibility, and environmental integrity. LEED provides a
framework that project teams can apply to create healthy, highly efficient, and cost-saving green
buildings. The number of LEED points determines the level of LEED certification the building
receives: Certified (40 to 49 points), Silver (50 to59 points), Gold (60 to 79 points), and Platinum
(80 or more points). The latest LEED v4.1 for Building Design and Construction (USGBC
2019) lists point requirements for advanced energy metering, demand response, renewable energy
production, and green vehicles. Following paragraphs summarize these requirements. For details,
please refer to the LEED v4.1 Building Design and Construction document (USGBC 2019).
LEED Points for Advanced Energy Metering:

One point will be given for installing advanced energy metering for:
• “All whole-building energy sources used by the building,” and

• “All individual energy end uses that represent 10% or more of the total annual consumption of
the building.”
Specific meter requirements include:
• The whole-building electricity meters should record consumption and demand as well as
power factor, if appropriate. All submeters must record both consumption and demand.
• The advanced energy metering system must be able to store at least 36 months of all meter
data with sample data interval of less than one hour.
• Meter data need to be remotely accessible through a local area network, building automation
system, wireless network, or other comparable communication infrastructure.
LEED Points for Grid Harmonization:

Up to two points can be awarded for buildings that are designed to participate in utilities’ DR
programs:
• Two points are given when a DR program is available, and the building is designed to
participate in the program through load shedding or shifting. The building needs to have the
capability for real-time, fully-automated DR, and enroll in the program for a minimum of one
year. The building should be able to shed at least 10% of the annual on-peak electricity
demand during a DR event.
• When the DR program is not available, one point is given for buildings that are designed to
provide infrastructure for future DR programs or dynamic, real-time pricing programs. The
infrastructure shall include advanced energy meters that can record interval data and
communicate with the BAS. The BAS needs to have the capability to accept an external DR
price or control signal. A plan needs to be developed to shed at least 10% of building
estimated peak electricity demand.
Up to two points can be awarded for buildings that implement one or more of the following
load flexibility and management strategies:
• “Peak Load Optimization: demonstrate that strategy reduces the on-peak load by at least 10%
as compared to peak electrical demand (1 point);
• Flexible Operating Scenarios: demonstrate that strategy moves at least 10% of peak load by a
period of 2 hours (1 point);
• On-site thermal and electricity storage: demonstrate that strategy reduces the on-peak load by
at least 10% as compared to peak electrical demand (1 point);
• Grid resilience technologies: project served by utilities with resilience programs in place,
which leverage strategies such as intentional islanding and part-load operation, automatically
achieve this credit (1point).”
LEED Points for Renewable Energy:

Up to five points can be awarded for buildings that “use on-site renewable energy systems,
procure renewable energy off-site, or purchase Energy Attribute Certificates (EACs) or carbon
offsets.” EAC is official documentation of renewable energy consumption, and each EAC certi-
fies that 1 MWh of renewable energy has been produced and injected to the grid. Carbon offset
(in unit of metric ton or carbon dioxide-equivalent [CO2e]) is a form of trade to reduce emissions
of carbon dioxide or other greenhouse gases. The number of points is awarded according to the
percentage of renewable energy generated or procured, or the percentage of EACs or carbon off-
sets purchased, as compared to the annual total building energy use.
LEED Points for Electric Vehicles:
One point is given to buildings that have charging infrastructure for electric vehicles (EVs) for on-
site parking. One option is to install electric vehicle supply equipment (EVSE) in 2% of all parking
spaces or at least two spaces, whichever is greater. The other option, called EV Ready, is to provide
electric vehicle charging infrastructure in 6% of parking spaces or at least six spaces. The EVSE must
meet specific charging capacity (Level 2) and comply with local standards for electrical connectors.
The EVSE also needs to be vehicle-to-grid (V2G) connected and can respond to TOU market sig-
nals. Refer to Section 4.9 for more information on EVs.
8.1.3 ISO 50001:2018—Energy Management System

International Organization for Standardization’s (ISO) ISO 50001:2018—Energy Manage-
ment System is an international standard that specifies requirements for “establishing, implement-
ing, maintaining and improving an energy management system.” It describes a systematic
approach to the continuous improvement of energy performance and to improve quality and envi-
ronmental management. ISO 50001:2018 provides a framework of requirements for organiza-
tions to (ISO 2018):
• “Develop a policy for more efficient use of energy

• Set targets and objectives to meet the policy
• Use data to better understand and make decisions about energy use
• Measure the results
• Review how well the policy works,
• Continually improve energy management, and
• Certify to ISO 50001.”
8.2 BUILDING AUTOMATED DEMAND RESPONSE STRATEGY MODELS

• In this section, the reader will learn different high-level ADR communication infrastruc-
tures.
Automated demand response (ADR) is a way of building energy systems to receive and
respond to DR signals automatically. Buildings implementing ADR can result in faster response
times, more efficient and reliable operations, and more energy and cost savings. In IgCC/189.1
(ICC 2018), one key mandatory provision for ADR is that the BAS must have an ADR infra-
structure, be capable of receiving ADR requests, and be able to implement load adjustments auto-
matically. At present, there is no universal way to implement this, as utilities or electric grid
operators use different ADR standards, and all BASs may not be compatible with a single stan-
dard. At a high level, there are three building DR strategy models: centralized, decentralized (or
embedded), and hybrid.
8.2.1 Centralized Model

The centralized model refers to a hardware-software platform illustrated in Figure 8.1. This model
is suitable for buildings that have modern BAS. This method is preferred as it allows for global whole-
building-level optimal ADR and DER control strategies to maximize benefit and minimize occupant
discomfort. The ADR signals are transferred between an ADR server at the utility or grid operator
side and an ADR node at the client (building) side. The ADR signals at the client side can either be
received by the BAS directly, which requires a BAS that uses the same ADR standard as the utility or
grid operator or through an ADR gateway or platform to “translate” the signals. The BAS that con-
tains the ADR algorithms is ultimately used to monitor, optimize, and control the building loads.
Figure 8.1 The centralized ADR strategy model.
Controllable building loads can include building HVAC equipment, lighting system, plug loads, and
local electricity generation resources.
8.2.2 Decentralized Model

The decentralized or embedded model, shown in Figure 8.2, refers to a hardware-software
platform in which the ADR node(s) at the building side can directly connect and communicate to
a single piece of equipment, to multiple pieces of equipment, or to local electricity generation
resources. The key difference with the centralized model is that there is no central BAS to control
and coordinate the ADR activities among building equipment. This model is suitable for small
commercial or residential buildings that do not have a modern BAS for global optimization and
control, and individual equipment or DER can directly or indirectly interact with ADR signals
and reduce electric energy use in response. The manufacturer often embeds ADR communication
modules or controllers in the equipment for this function. Under this model, in general, buildings
will not be able to provide overall optimized building operations or benefits to the building owner.
8.2.3 Hybrid Model

The hybrid model, illustrated in Figure 8.3, refers to an architecture that combines centralized
and decentralized models. This model may be used in situations where there is a BAS controlling
the majority, but not all, of the building equipment or local generation assets.
Building designers need to be aware of these options. The best option for a specific building
depends on the local regulatory requirement, the utility’s demand response program, the utility’s
ADR signal standard and protocol, and the ADR capabilities of the BAS, equipment, and local
generation assets.
Figure 8.2 The decentralized ADR strategy model.
Figure 8.3 The hybrid ADR strategy model.

8.3 BUILDING-TO-GRID-RELATED COMMUNICATION PROTOCOLS

• In this section, the reader will learn different communication protocols related to ADR.
• OpenADR®, BACnet®, and VOLTTRON™ are introduced.
• Potential cybersecurity issues in ADR are addressed.
Communication standards and protocols are critical in designing a building that can provide
ADR since utilities’ communications and controls are much different from those used in building
controls. Many smart-grid-related standards have been established (SEPA 2019a). NIST pro-
vided a Framework and Roadmap for Smart Grid Interoperability Standards (NIST 2014b), which
describes logical models of these systems. For a BAS or a building energy system component to
receive ADR signals and respond to reduce load, it needs to use the same communication protocol
that the local ADR program or aggregator uses or a third-party middle layer platform/ADR gate-
way (e.g., VOLTTRON®) to “translate” between the ADR signals and BAS control signals. Cur-
rently, some utilities use proprietary communication protocols and others use an open, standard
communication protocol (i.e., OpenADR®.) Most modern BASs and building equipment are
now compatible with BACnet®, an open data communication protocol for Building Automation
and Control Networks. BACnet systems make up a majority of sales worldwide and are especially
dominant in North America. The overwhelming majority of BACnet vendors (> 1000 in total) do
not make BASs at all. They make building equipment or special products that come with built-in
BACnet controls for integration into a system. However, BACnet was not designed for utility-to-
building communication and it is not used that way. Instead, several BACnet BAS vendors have
products that support ADR protocols like OpenADR. The OpenADR product is also a BACnet
device. The integration between the two is typically done through custom programming of the
supervisory control logic. An example of how these protocols work in a centralized ADR strategy
model is illustrated in Figure 8.4.
8.3.1 OpenADR
The Open Automated Demand Response Communications Specification, also known as
OpenADR, is a nonproprietary, open, and standardized communications specification to
automate demand response. The current version, OpenADR 2.0 (a and b), are profiles of the
OASIS Energy Interoperation (EI) standard and is designed to facilitate automated ADR
actions at the customer location, whether it involves electric load shedding or shifting.
OpenADR is also designed to provide continuous dynamic price signals such as hourly day-
ahead or day-of real-time pricing. (See Section 3.3.2 for more information on dynamic pric-
ing.) An industry alliance, OpenADR Alliance, was formed in 2010 and has over 130 mem-
bers as of 2019, including utilities, software suppliers, device manufacturers, national labs,
DR aggregators, testing and certification labs, system integrators, and consulting firms
(https://www.openadr.org). The OpenADR Alliance is now the primary authority for the
development and adoption of OpenADR, and California building energy code Title 24 now
requires at least one standards-based ADR messaging protocol, such as OpenADR, be used
for lighting and HVAC control for demand response in large new construction. The
Figure 8.4 An example of building-to-grid communication protocols.
OpenADR Alliance is also responsible for the testing and certification of OpenADR-com-
pliant products. OpenADR 2.0b’s importance and viability has been recognized internation-
ally, resulting in it being adopted by the International Electrotechnical Commission (IEC) as
IEC 62746-10-1; it is the only international standard for DR.
OpenADR is a communications data model, which facilitates information exchange
between the electricity service provider and the customer. It relies on existing open standards
such as eXtensible Mark-up Language (XML) and the Internet Protocol (IP) to exchange
ADR signals through the Internet. The communications data model can be used for continu-
ous operations. Key benefits of OpenADR include: 1) open specification, 2) flexibility, 3)
innovation, 4) interoperability and ease of integration, 5) support for a wide range of infor-
mation complexity, and 6) remote access.
The concept of OpenADR is intended to allow anyone to implement the two-way signaling
systems using a client–server model (refer to Figures 8.1 through 8.4), in which the ADR server
hosts, delivers, and manages ADR prices and signals, and the clients subscribe the ADR informa-
tion. In OpenADR, the ADR server is called Virtual Top Node (VTN), and the clients are called
Virtual End Node (VEN). In a one-level implementation, the VTN is on the utility or grid oper-
ator side and the VENs are on the building side. In a two- or multiple-level implementation
where an aggregator is involved, the aggregator can be both VEN (receiving ADR signal from the
ADR server) or VTN (hosting and managing ADR signals for its clients on the building side.)
The relationship between VEN and VTN can be illustrated using Figure 8.5 (OpenADR 2013).
Refer to Section 4.3 for additional information on direct and indirect methods of ADR.
OpenADR 2.0 supports the following

services (OpenADR 2019d):
• “Registration (EiRegisterParty):
Register is used to identify entities such
as VENs and parties.
• Market Contexts (EiMarketContext):
Used to discover program rules,
standard reports, etc.
• Event (EiEvent): The core ADR event
functions and information models for
price-responsive ADR.
• Quote or Dynamic Prices (EiQuote):
EiDistributeQuote for distributing
complex dynamic prices such as block
and tier tariff communication (will be
in an addendum in the future.) Figure 8.5 Illustration of OpenADR.
Source: OpenADR (2013)
• Reporting or Feedback (EiReport): The
ability to set periodic or one-time
information on the state of a Resource (response).
• Availability (EiAvail): Constraints on the availability of Resources. This information is set by
the end node and indicates when an event may or may not be accepted and executed by the
VEN with respect to a Market Context.
• Opt or Override (EiOpt): Overrides the EiAvail.”
Not every utility currently uses OpenADR for its ADR program. One example of a propri-
etary connection method is Jetstream. It is a “data system to connect remote assets and PJM to
satisfy the real-time, market, and other data transactions” (PJM 2019). It uses dedicated TCP/IP
with an encryption gateway over secure Internet, and the communication protocol is Distributed
Network Protocol (DNP) 3.0. Building owners and designers need to talk to their local utilities
and learn about their ADR program and communications standard before designing a BAS that
can communicate with the utility or grid operator’s ADR server.
8.3.2 BACnet
BACnet is a data communication protocol for Building Automation and Control Networks
and has been designed to be open and meet the communication needs of building automation and
control systems. These applications include HVAC, fire and other life safety and security systems,
energy management, lighting control, physical access control, and elevator monitoring systems.
BACnet is now an ASHRAE Standard (ASHRAE 2016a) and is compatible with several net-
working communications standards such as BACnet/IP, Ethernet, ARCNET, and LonTalk. The
communication media include twisted-pair copper, coaxial cable, fiber optics, and wireless. A
majority of the modern BASs and HVAC equipment/devices in commercial buildings are now
using BACnet, though the number of legacy systems still in use that predate BACnet is unknown.
In a typical modern BAS (shown in Figure 8.6), BACnet/IP is used as a high-speed backbone
that connects workstations and supervisory controllers. It is also used to connect separate build-
ings into one system. The supervisory controllers often serve as routers to slower networks that
Figure 8.6 A typical BAS network.
connect field controllers that directly control the building equipment. BACnet Web Services are
also available through a gateway or router, providing an interface for the BAS to communicate
with the Internet and the Cloud.
BACnet has features designed to facilitate submetering and load shedding. Implementing
those features requires a combination of custom-control programming to implement site policies
and the use of network visible objects that allow operators and supervisory controllers to view sub-
meter information and implement load-shedding strategies.
• The BACnet Load Control object (LCO). The BACnet Load Control object is defined as “a
standardized object whose properties represent the externally visible characteristics of a
mechanism for controlling load requirements,” and allows a BAS to implement load-shedding
strategies and receive load shed status (ASHRAE 2016a). A BACnet device can “use a Load
Control object to allow external control over the shedding of a load that it controls”
(ASHRAE 2016a). The LCOs can also be linked hierarchically. A single load shed signal can
be distributed to multiple LCOs that manage different individual loads. However, how the
load is shed and by how much is not specified in these LCOs. The control strategies need to
be preprogrammed into the BASs.
• The BACnet Accumulator Object. This BACnet object measures and accumulates input counts
(pulses) over time, and typically can be used to represent electricity (or other) submeter
readings. This object can be set with an initial Present_Value based on the meter reading. The
object can be used in peak load management and accounting and billing management systems.
• The BACnet Web Services (BACnet/WS). BACnet/WS is a tool being considered as an easier
path (compared to creating new or modify existing BACnet objects) to implement more
advanced smart grid functionality beyond the capabilities of the BACnet Load Control object
and Accumulator object. The BACnet Web Services allow external applications to read and
write data securely to the building automation system through the Internet and enable a
variety of new business applications. For example, the BACnet/WS can make BAS data
available to “Big Data” data-mining applications to demonstrate compliance with energy
performance targets and link classroom scheduling systems to occupancy controls. The
BACnet Smart Grid Working Group (SG-WG) has been focused on mapping the smart
grid-related services up to the Cloud via BACnet Web Services.
The SG-WG is also working on the integration of facility resources (flexible load, generation,
electrical or thermal storage) with the smart grid. The latest focus is on defining a building energy
services interface (ESI) that receives OpenADR signals, electricity market signals, utility meter
data, and weather feeds, and then communicates on the internal BACnet network to manage con-
sumption, receive load forecasts, and perform other functions defined in ASHRAE Standard 201
(ASHRAE 2016b).
8.3.3 VOLTTRON
Integrating real-time, scalable distributed control of building energy systems, renewable
energy generation, energy storage, and EVs with the smart grid is challenging when the ADR
platform and BAS cannot directly communicate. VOLTTRON™ is a third-party program/plat-
form/gateway that “translates” signals between ADR platforms and BAS (PNNL 2019c). ADR
program implementers and building control designers can consider using VOLTTRON as a mid-
dle layer between ADR signals and the BAS. It was developed by Pacific Northwest National
Laboratory (PNNL) to support the needs of efficient buildings and the integration of distributed
energy resources with the smart grid. VOLTTRON is a distributed sensing and control software
platform that runs on low-cost hardware (e.g., Raspberry PI, Beagle Bone), providing services to
its “agents” that allow them to communicate with physical devices and other resources. It serves as
an integrating platform for the components of a transactional network. The following figure illus-
trates various components of a transactional network platform and VOLTTRON as a middle
layer (or information exchange bus) to bridge the communication gap among various compo-
nents, including utility ADR signals and BAS-controlled devices.
Agents and platform services shown in Figure 8.7 communicate with each other via the infor-
mation exchange bus using publish/subscribe over a variety of topics. For example, the weather
agent would publish weather information to a “weather” topic to which interested agents would
subscribe. Topics are hierarchical, following the format “topic/subtopic/subtopic,” allowing agents
to be as general or as specific as they want with their subscriptions.
Key VOLTTRON attributes include:
• Improves the operational efficiency of building systems

• Open, flexible, and modular software platform
• Object-oriented, modern software development environment
• Language agnostic (does not tie applications to a specific language)
• Supports commonly used devices and control systems protocols, such as BACnet and
Modbus®
• Low CPU, memory, and storage footprint requirements
• Supports Intel and non-Intel CPUs.
• Supports platform services, such as messaging, mobility, and application support.
VOLTTRON has been demonstrated and deployed by national labs, universities, and com-
mercial companies in multiple projects and products (Cort et al. 2016), and recently has been
transferred to an open source foundation called Eclipse (Eclipse 2019).
Figure 8.7 Illustration of VOLTTRON.
8.3.4 Other Protocols

There are other communication protocols used to integrate the smart grid with building
energy systems and BTM DER, including:
• Modbus. Modbus is a communication protocol used for transmitting information over serial
lines between electronic devices. It has a master-slave/client-server architecture for
communications between intelligent devices. There are typically one Master device and up to
247 Slave devices in a Modbus network. Modbus is an “open” network protocol commonly
used in the industrial manufacturing environment. The most common use of Modbus in
building applications is to integrate data from a single device with a BAS that cannot
communicate directly with that device. Some electric and energy meters have a built-in
Modbus communication interface.
• LonWorks (ISO/IEC 14908-1). LonWorks (Echelon 2009) is a networking platform built on
the LonTalk protocol with proprietary hardware, the Neuron Chip from Echelon Corp, for
networking devices over media such as twisted pair and others. Many building automation
systems still use LonWorks as their building control network communication protocol.
However, so far there is no known OpenADR-certified BAS that uses LonWorks.
• DALI. Digital Addressable Lighting Interface (DALI) is a network-based, two-way
communication protocol for stand-alone lighting control systems in commercial buildings.
The protocol is used by many lighting systems to digitally communicate among individual
lighting fixture drivers/ballasts and DALI controllers to dim or turn off lights. Digital lighting
systems in commercial buildings can also be integrated with the BAS (using BACnet). The
digital lighting systems are important in DR (although the importance is diminishing with
transitions to LEDs). More discussion on using lighting controls as part of a DR strategy is in
Section 8.4.2.
• Green Button. Green Button is an API that enables consumers and businesses to download
their energy usage data from their utility’s secure websites in a standardized electronic format.
Green Button has been voluntarily adopted by many utilities nationwide, and it helps building
owners understand building loads and plan strategies for grid interaction. This is particularly
true if there is no BAS in the building or the BAS does not record the whole-building energy
use data.
• ANSI/ASHRAE/NEMA Standard 201-2016: ASHRAE Standard 201-2016, Facility Smart
Grid Information Model (FSGIM) is a forward-looking guide regarding the future
development/evolution of building control protocols and products. It defines an abstract,
object-oriented information model to enable building systems and equipment to manage
electrical loads and generation sources in response to the smart grid. This model provides the
basis for information exchange between control systems and end-use devices, regardless of the
communication protocol in use. It also defines a comprehensive set of data objects and actions
that support a wide range of energy management applications and electrical service provider
interactions. The project implementations depend on the actual building energy system, the
local energy market, and the local utility ADR programs. The BACnet Smart Grid Working
Group is referencing this standard in defining a building energy services interface to serve as a
bridge between BACnet and other ADR protocols such as OpenADR 2.0.
8.3.5 Cybersecurity Issues

Many efforts have been made by stakeholders to address the smart grid cybersecurity issues
and improve its cyber resilience. NIST led by developing a three-volume guideline for smart grid
cybersecurity in 2014 (NIST 2014a), which addresses strategy, architecture, and high-level
requirements; privacy and the smart grid; and supportive analyses and references. In 2018, a gen-
eral cybersecurity framework was developed and published by NIST (NIST 2018). The frame-
work is a risk-based approach to managing cybersecurity risk. In general, cybersecurity involves
not only the physical infrastructure security (power delivering and consuming equipment, con-
trols, and communications hardware and software) but also policies and business processes.
OpenADR uses public key infrastructure (PKI) to ensure that communications between the
OpenADR server (VTN) and the OpenADR client (VEN) are authenticated and secure. Both
the VTN and the VEN manufacturers need to purchase valid OpenADR digital certificates from
digital certificate service providers for authentication. Manufacturers can then embed the digital
certificates into their products. These digital certificates are only issued by the digital certificate
service providers after rigorous testing in a highly secured environment, following strict audit
requirements. Digital certificate management is important in implementations and should follow
NIST recommendations to have policies and business processes in place to allow the proper con-
trol, authorization, issuance, and revocation of these certificates. An OpenADR-certified product
(for compatibility with OpenADR specification) does not mean the manufacturer has valid
OpenADR digital certificates (for cybersecurity) (OpenADR Alliance 2019a, 2019b, 2019c).
BACnet has defined, very robust security that can be implemented in all BACnet devices.
However, these features have not been widely supported commercially because of little consumer
demand and BACnet security is unfamiliar to traditional IT staff. Instead, IT staff commonly use
virtual private network (VPN), remote desktop, control system web server, or mixed approach to
make BACnet/IP network secure (Neilson 2013). Securing BACnet/IP networks from outside
attacks does not make lower-level BACnet networks (e.g., BACnet/MS-TP; refer to Figure 8.6)
secure from attacks made from inside the BAS network. The building IT/business network often
has to be physically segregated from the building controls network. A new secured alternative to
BACnet/IP called BACnet Secure Connect (BACnet/SC) is being developed by the BACnet
Information Technology Working Group (Fisher et al. 2018), redesigning the network layer—
one of the seven Open Systems Interconnection (OSI) model computer network layers—to run
over modern IT networks. A BACnet/SC network can benefit from the latest advancement and
development of modern security protocols, and it allows the IT network and building controls
network to share the physical infrastructure and reduce project cost. BACnet/SC is compatible
with older versions of BACnet and uses standard Internet protocol and standard, widely used
security methods, alleviating the concerns of IT staff. BACnet/SC is currently in the third public
review. A more general overview of building system security is included in the Whole Building
Design Guide (Chipley 2017).
VOLTTRON is built on Linux and includes many security features of the Linux operating
system (Akyol et al. 2017). It “uses a threat model approach for determining threats and vulnera-
bilities of the software and to reasonably reduce the attack surface and/or harm endured after a
compromise” (Akyol et al. 2017). For a BAS or device driver to collect data or send control com-
mands through a VOLTTRON platform, security measures as described in NIST’s Guide to
Industrial Control Systems Security (NIST 2015) and aforementioned approaches (Neilson 2013)
are recommended. Agent codes need to be reviewed for security issues and malicious intent before
deployment. VOLTTRON can also implement secure and authenticated communications (e.g.,
secure socket layer solid-state lighting [SSL]) if the underlying protocol supports it.
A key consideration in designing a building-to-smart-grid communication network is decid-
ing what cybersecurity standard to use and how to establish firewalls and protect communications
between the utility and the building control and electrical systems. In many cases, the design will
depend on pre-existing system requirements for both parties, as well as their existing IT security
policy. When buying any hardware or software components, only the trusted vendors and their
products that are compatible with the selected standard can be considered.
8.4 BUILDING SYSTEM DESIGN CONSIDERATIONS

• This section details traditional ADR strategies for HVAC, lighting, and electrical systems.
• Building system design considerations to implement ADR strategies are described.
• Comfort impact is discussed.
• Future capabilities are discussed.
Building designers need to design energy-efficient buildings that can also interact with the smart
grid and provide grid services. The characteristics of these buildings are “efficient, connected, smart,
and flexible” (DOE 2019a). Different demand management options (refer to Section 4.3) can provide
different grid services. Each building energy system component plays a different role in providing these
grid services. Traditional DR strategies can be categorized into four groups: HVAC system, lighting
system, miscellaneous equipment (e.g., fountain and irrigation pumps, electrical vehicle chargers,
industrial process loads, cold storages, and elevators), and noncomponent-specific strategies (e.g.,
demand limit strategy and price-level response strategy that are not component-specific, and can be
any single or multiple DR strategies stated previously) (LBNL 2007).
8.4.1 HVAC System

In commercial buildings that have a BAS, electricity consumption in heating and cooling can
be as much as 50% of the total building electricity use. Traditionally, these buildings have primar-
ily derived their load flexibility from HVAC systems, such as heating and cooling controls, ther-
mal storage, and motor speed reductions (LBNL 2007). For existing buildings, the LBNL
Demand Response Research Center provides a DR quick assessment tool that can be used for
building owners and operators to assess different traditional DR approaches (LBNL 2019a). For
buildings with packaged air conditioners and heat pumps that are installed on rooftops (i.e.,
RTUs), which account for approximately 42% of total energy consumed by cooling equipment,
use of advanced controls not only is an energy efficiency measure but also can be an ADR strategy
(AESC 2017; SCE 2017; PNNL 2019a). Advanced RTU controls also allow RTUs to be net-
worked and grid-responsive (PNNL 2019b; Brambley 2013). The following is a summary of
ADR strategies for HVAC equipment and systems and their design considerations.
• Zone Temperature Control.

• Global temperature adjustment of zones for partial or an entire building can be a very
effective ADR strategy for load shedding and applies to all forced air systems. For a
commercial building with a BAS, it requires the BAS with global temperature adjust-
ment capability at the zone level. For a commercial building without a BAS, the zone
temperature controller’s capability to directly receive and respond to ADR signals (by
increasing or decreasing zone temperature set point) is required. Many modern smart
thermostats have such features.
• Utilizing passive building thermal mass for load shifting or demand shedding is
another ADR strategy. This involves lowering the zone temperature set points during
off-peak hours to store cooling energy in the building mass and then increasing the set
points during the ADR event to unload stored cooling energy. Besides similar building
control requirements to the zone temperature control, the building should also have
medium to high building mass to be effective.
• Air Distribution.
• The air-handling unit supply duct static pressure decrease can be used for a forced-air
variable-air-volume (VAV) system for demand shedding. The result is fan power
reduction. It does require the system to be equipped with variable-frequency drives
(VFDs).
• Air-handling unit supply air temperature set points can be increased for forced-air
VAV systems to shed demand. This strategy applies to all zone control systems, but a
BAS is required.
• HVAC Fan.
• VFDs can also be limited to an absolute value or a certain percentage of the typical
operating values during a demand shedding period. All zone control systems with
VFD-controlled fans can use this strategy.
• For constant-air-volume (CAV) systems, some of the fans or direct expansion (DX)
units used for air distribution can be turned off to reduce fan power and cooling load
temporarily. This only applies to buildings with multiple air handling or packaged
units or a multifan, single-duct system.
• In a central plant with forced-air systems providing cooling load, the air-handling
units’ cooling valve positions can be limited or lowered temporarily to reduce chiller
demand and possibly chilled-water pump power if VFD pumps are used. This strategy
requires a direct digital control (DDC) for air distribution and no chilled-water tem-
perature set point optimization/reset in place.
• Central Plant.
• In a load-shedding event, increasing chilled-water temperature is a direct method to
decrease chiller demand. This method requires a BAS for the central plant.
• The chiller demand can also be limited by directly controlling the chiller compressor
when there is a BAS for central plant and air distribution, and a chiller demand limit
or capacity limit is available.
• In a central plant with multiple chillers, some of the multiple chiller units may be shut
off to shed demand.
• Thermal energy storage (TES) can be used in load shifting by ADR control algo-
rithms (Yin et al. 2015). TES needs to be integrated into the central plant design, and
a BAS is required to implement the ADR control algorithms. Buildings with thermal
energy systems can also “provide a reliable and fast load shed by turning off chiller
plants without any interruption on the building comfort service level” (Yin et al.
2015).
• Rooftop Unit.
• RTUs typically run independently and are not networked. To enable DR, these units
have to have an ADR-enabled controller, or an advanced RTU controller with ADR
capability needs to be integrated into the existing units. In an ADR event, RTUs can
be controlled by advanced controllers to reduce the compressors speeds or cycle the
compressors on and off. Advanced RTU controllers can also precool space before an
ADR event and increase the temperature set point during the event. These advanced
RTU controllers need to be able to directly communicate with an ADR server using
OpenADR or other compatible ADR protocols.
• For buildings with multiple RTUs, a better ADR strategy is linking these RTU con-
trollers together and having them respond to a single ADR signal. This can be accom-
plished by overlaying a BAS on top of these RTU controllers. The RTU controllers
can be networked together through BAS field network(s) and can respond to BAS
supervisory controls, which will receive a single ADR signal and respond with an
ADR control strategy that uses and optimizes all available building ADR resources.
Some of these HVAC DR strategies have rebound effects at the end of a DR period due to the
nature of load shifting or load shedding. Building operators need to consider implementing a
rebound avoidance strategy to avoid demand spikes caused by the increase of load immediately
after a DR event. The rebound avoidance strategies may include slow recovery, sequential equip-
ment recovery, and extended ADR control period (LBNL 2007). Refer to Chapter 7 for more
information on rebound effects.
8.4.2 Lighting System

In the past decade, there has been significant growth in the use of solid-state lighting (SSL)
technology. The energy savings from using light-emitting diodes (LEDs) instead of traditional
incandescent or fluorescent lighting are significant and well documented. LED lighting can be
easily dimmed, and proper lighting and daylighting controls save even more energy. Advanced
lighting controls can be used to control the lighting load in response to utility demand response
signals. Though some studies exist (Newsham and Birt 2010; LBNL 2007), lighting is still
underutilized for ADR (Jackson 2017), partially because it requires advanced lighting control fea-
tures such as a networked or a connected lighting system, and the lighting system also needs to be
compatible with the utility ADR protocol or linked with the BAS that provides the integration.
When designing lighting systems that can provide ADR, the following factors need to be consid-
ered:
• Zone switching (i.e., switching off luminaires in an entire noncritical zone) is the simplest
demand-shedding strategy for a lighting system. This requires the design of lighting zones/
loads to separate critical lighting with noncritical lighting on different circuits, and separate
zoning of luminaires in common spaces (e.g., lobby, corridor, cafeteria).
• Luminaire/lamp switching is another demand-shedding strategy that is commonly used for
fluorescent fixtures with multiple lamps or the same fixtures with tubular LED (TLED)
retrofits. This involves switching off a percentage of luminaires or switching off one-third,
one-half, or two-thirds of lamps within a luminaire. To implement this, the lighting system
design needs to allow for separating portions of luminaire or lamp groups within a luminaire.
Fixtures need to be able to wire for two or three lighting levels, and ON/OFF switch controls
need to be available to change the lighting levels.
• Continuous dimming lights can be yet another demand-shedding strategy. Dimmable ballasts
are required, and analog or digital light level control signals from a local controller or central
BAS or lighting control system can be used to dim the lights gradually. Continuous dimming
is typically less disruptive to occupants than zone switching or luminaire/lamp switching in an
ADR event.
• To enable advanced networked lighting controls, select lighting systems with networked
lighting control capability. Major lighting system vendors now have product lines that come
with these capabilities. This allows all lights to be controlled digitally (i.e., ON/OFF or
dimmed) from a central control point. Many of these networked lighting system fixtures not
only have digital addresses for identification but also embed sensors to detect occupancy and
interior light levels, and sometimes to measure temperature or CO2 level, for use in HVAC
controls. They can communicate wirelessly with nearby lighting controllers and can be
BACnet-compatible as well.
• Select lighting control systems that are compatible with the local utility’s ADR signal. The
OpenADR Alliance website lists commercially-available products that support the
OpenADR protocol (https://www.openadr.org/). Some manufacturers of these products may
offer the OpenADR VEN as an optional feature. Others may offer compatible components
for use with their lighting control systems that can communicate via OpenADR. If none of
these are an option, another ADR-compliant solution is integrating the lighting control
system into a larger BAS within the building and making the BAS compatible with
OpenADR or other ADR protocols used by the local utility.
8.4.3 Electrical System

For building electrical system design, special consideration should be given to smart metering,
smart power distribution, smart control, and switching among local power generators and unin-
terruptible power supplies (UPS).
Electricity meters are used to monitor the power and energy consumption of the whole build-
ing, the electrical panels, or the electrical circuits. A smart electricity meter is an electronic device
that measures electric energy consumption and establishes two-way communication with the util-
ity or a central system. The whole-building revenue meters (installed by utilities) are different
from the owner-installed submeters in that: 1) utilities do not access whole-building meter data in
real-time, and they typically retrieve data in batches periodically; 2) utilities use smart meters for
outage detection and to simplify data collection processes for billing; and 3) building owners use
submeter data for real-time monitoring and control of building equipment and loads. Building
owners might get the whole-building meter information through a direct connection with the
BAS or through monthly utility bills. Although a building professional has very limited, if any,
control over the electric meter used by the utility, many utilities are installing smart meters as part
of an advanced metering infrasture (AMI). This AMI is an “integrated system of smart meters,
communications networks, and data management systems that enables two-way communication
between utilities and customers” (DOE 2016). From a building owners’ perspective, owners with
a large portfolio of buildings (such as federal agencies) may also desire or require advanced meters
be installed “to the maximum extent practicable” by statue (DOE 2014a).
Building professionals might consider electric submeters as part of a smart building design to
monitor individual circuits or pieces of equipment. When selecting owner-installed electric sub-
meters, it is recommended they have the following features:
• Ability to measure energy consumption, real power, reactive power, power factor, and other
power quality measures to provide energy efficiency, load shedding, load shifting, and load
modulation services
• Ability to integrate with various communication technologies and use smart meter open
standards for two-way communication and interoperability
• Ability to upgrade remotely, providing greater flexibility for future regulatory and
communication requirement changes
• Ability to ensure data protection, privacy, and security
Electric submeters should be installed to measure major energy-consuming equipment (e.g.,

chillers, fans, pumps) and subsystems at the circuit level where critical loads will be controlled by
the BAS. These submeter readings can provide valuable information for more complex whole-
building optimal ADR control strategies.
The first concern of power distribution system design is ensuring all applicable design codes
and standards are met (including, but not limited to, the National Electrical Code [NFPA 2017],
the National Electrical Safety Code [IEEE 2017b], and local building codes). To design with smart
grid operation in mind, a building designer should not only consider the standard analysis of volt-
age levels, power quality, power reliability, redundancy, and short-circuit protection, but should
also identify loads that can be flexible to allow for control. Such identification may require collab-
oration with mechanical, lighting, and controls design engineers. To enable easier control of flexi-
ble loads, designers should consider separating critical loads from the flexible loads on different
electrical panels or circuits. Furthermore, the main electric panel and power distribution panels
should be IoT-enabled (“smart panels” that provide flexibility, scalability, controllability, and
remote-monitoring capabilities in distributing power to building systems). Finally, a smart-grid-
enabled design should include submetering to enable communication, monitoring, and control of
circuits or systems within the building.
For buildings designed to have backup power and local generation such as wind turbines or
PV systems, a centralized smart switch control panel may be needed. The panel (including the
appropriate switchgear) enables flexible generation sources to provide critical backup as well as
generation services to the grid. When connected to the grid, the panel will coordinate with the
smart power distribution panel(s), the BAS, and distributed generation resources for optimal load
shifting or load shedding to smooth the load curve. When grid power is not available, the panel
needs to be able to quickly use UPS or local generation resources to maintain the power supply to
critical loads and safe operation of the electrical system.
With the higher efficiencies for HVAC equipment and lighting systems today, plug and pro-
cess loads account for a higher percentage of commercial building energy use than they have in
the past. Several references exist that describe how to better design and manage these loads in a
new or existing building (DOE 2015a; NBI 2015). Traditionally, plug loads are not controlled by
the BAS. For a smart building with ADR capability, it is suggested that building plug loads
should be designed to use a distributed architecture with the use of smart communicating power
strips and gateways to communicate to the BAS for integrated, flexible load control (Arnold et al.
2013).
8.4.4 Building Automation System

The BAS in a commercial building plays a significant role in automatically receiving smart
grid signals and responding to reduce demand and provide grid services while maintaining occu-
pant comfort. When designing a BAS for providing grid services, the designer needs to have an
end-to-end holistic view. The network and communication design should start with considering
how to receive ADR signal from the utilities, to what system or equipment needs to be controlled,
how they will be controlled optimally. Design considerations for a building control system
include, but are not limited to, the following aspects:
• Building DR Strategy Model. Which models to use will depend on the local utility’s ADR
standard, ownership(s) of all controlled mechanical equipment, and if global optimal ADR
response is desired.
• Building Controls Network Architecture. The controls network should include the capability to
connect to and communication with the local utility ADR system.
• A BAS may not be able to directly receive ADR signals through a standard protocol such as
OpenADR (though some may have this capability embedded.) In this case, a customized
solution or intermediate layer platform may be needed. The control network also should be
able to communicate with local electric power generation resources such as PV and battery
storage.
• Building Controllers. Both field-level and supervisory-level building controllers should have
enough memory, data storage, and CPU power to execute complicated control programs for
ADR response. It is also preferred that building controllers can directly communicate with
ADR signals.
• Software. The BAS software should have features that are suitable for implementing various
ADR control strategies.
8.4.5 Occupant Comfort Considerations

During normal building operations, the building energy system is supposed to be controlled
to maintain space temperature, humidity, and lighting conditions comfortable to occupants.
ANSI/ASHRAE Standard 55, Thermal Environmental Conditions for Human Occupancy specifies
conditions for acceptable thermal environments and should be used in building design and opera-
tions (ASHRAE 2017). The Illuminating Engineer Society (IES) Lighting Handbook has recom-
mended minimum light levels and uniformity targets for various building and space types (IES
2011). During a DR event, these occupant thermal and visual comfort ranges may be temporarily
violated. The rate of change for temperature and light levels also has an impact on occupant com-
fort. So far, there has been no standard established on the acceptable temperature and visual com-
fort ranges and the rate of change. One study (Aghniaey et al. 2017) indicated that the thermal
comfort perception by occupants is a function of “age, activity level, time of exposure, regional cli-
matic and cultural considerations,” and suggested building design and operations should consider
the adaptive capability of the occupants, and that occupant discomfort can be minimized through
global multiobjective optimal control. A few empirical studies (Newsham and Birt 2010; News-
ham et al. 2008; Piette et al. 2005) that 20% to 50% of lighting power could be shed with mini-
mum occupant complaints. More studies are needed in the area of demand reduction and the
impact on occupant comfort.
8.4.6 Future Capabilities

Researchers are actively working on cutting-edge technologies and ADR strategies to add
future capabilities for buildings to provide grid services. Commercial building HVAC equipment
and systems can provide ancillary services for the smart grid (Kim et al. 2016; MacDonald et al.
2014). These services include frequency regulation and volt-VAR support (Withnell et al. 1996)
and more. Recent lab research (Jie and Braun 2019) and experimental field testing (Vrettos et al.
2018) have shown that HVAC equipment such as heat pumps, rooftop units, and chillers can be
used to provide frequency regulation and it is done by directly changing the variable-speed com-
pressor or fan speed. The study by Jie and Braun (2019) showed that the regulation credit “could
offset 20% ~ 48% of the hourly electricity cost for operation of the HVAC equipment.” Currently,
the research is only limited to a few pieces of equipment. The difference between second-by-sec-
ond frequency regulation control from the hour-by-hour load control in demand response is
shown in Figure 8.8.
Another active research areas is model predictive control (MPC). With real-time dynamic
pricing, scheduled ADR events, and different ADR strategies, a big question for building owners
and operators is how to achieve overall maximum benefit while minimizing disruptions to occu-
pants. MPC has been used in research (Pavlak et al. 2014; David et al. 2016) to determine opti-
mal operating strategies considering energy use and cost, peak demand reduction, DR revenue,
and frequency regulation revenue. In an MPC framework, a building thermal zone model and the
HVAC model need to be built, and optimization techniques are used. The real-world application
of MPC on a BAS is still limited because of its complexity, and third-party software may be
needed to interface with BAS and the Internet to obtain real-time HVAC system inputs, weather
information, ADR signal, and to run building model simulation and strategy optimizations.
Future capabilities also include integrating both ADR and DER (LBNL 2015). The integrated
system allows dynamic optimization of cost and energy for customers and automates the ADR and
Figure 8.8 DR versus frequency regulation.
Figure 8.9 Example of DER integration.

Source: LBNL (2015)
DER responses. An example of the controls and communication DER integration framework is
shown in Figure 8.9 (LBNL 2015). The ADR server publishes grid tariffs signal using OpenADR,
and the signal is received by the integrated system design support and optimization engine Distrib-
uted Energy Resources–Customer Adoption Model (DER-CAM). The DER-CAM gets inputs
from the ADR server, weather report, renewable generation, real-time BAS information, and load
profiles, then solves the overall optimization problem and decides on ADR strategies and DER gen-
eration strategies for the BAS and dispatchable generation to execute.
MICROGRIDS
Much of the Smart Grid Application Guide focuses on applications and strategies for connect-
ing individual DER assets within a building. But building designers can also benefit in several
ways from an approach combining multiple DER assets. This section covers microgrid design and
operation, with associated benefits and strategies.
9.1 DEFINITION
The microgrid was first proposed as “a cluster of loads and microsources (<100 kW) operating
as a single controllable system that provides both power and heat to its local area” (Lasseter 2002).
The concept expanded to include larger sources, energy storage systems, and the ability to inten-
tionally “island,” or disconnect electrically from the larger grid while still serving loads within the
microgrid’s electrical boundaries.
DOE’s Microgrid Exchange Group formally defines a microgrid as “a group of interconnected
loads and distributed energy resources within clearly defined electrical boundaries that acts as a
single controllable entity with respect to the grid. A microgrid can connect and disconnect from
the grid to enable it to operate in both grid-connected or island-mode” (Ton and Smith 2012).
This definition was also adopted by IEEE and is included in several IEEE standards, including
IEEE Standard 1547.4-2011 (IEEE 2011), IEEE Standard 2030.7-2017 (IEEE 2017a), and
IEEE Standard 2030.9 (IEEE 2019). Figure 9.1 shows a schematic representation of a basic
microgrid. In this figure, the microgrid is envisioned as incorporating several buildings and
homes. However, in many cases a microgrid may be entirely within a single building.
An example of a microgrid could be a hospital with a high demand for back-up power. To
meet this demand, a natural-gas-burning turbine could be installed. This primary power source
could be supplemented with rooftop solar panels to provide low-cost power during the day and a
battery energy storage system to supply energy during the transition to island period.
Another example could be an industrial facility with need for significant process heat. This
could be supplied by a CHP system, with solar panels and batteries to provide additional low-cost
power. Solar panels could be used for peak shifting or demand reduction during the day, and the
batteries could be used for this purpose during the night. While many industrial facilities would
not plan to operate during a grid outage, being configured as a microgrid could supply sufficient
119
120 | Microgrids
Figure 9.1 Schematic representation of a microgrid.
power during an outage to properly shut down industrial equipment to prevent damage to equip-
ment or inventory.
9.1.1 IEEE Definition and Additional Terminology

While IEEE has adopted the general DOE definition as provided in Section 9.1, a few addi-
tional details and parameters are also provided, which are important to understand when review-
ing the IEEE standards related to microgrids.
First, IEEE 1547-2018 specifies that a microgrid is a subset of intentional islands (IEEE
2018), the latter defined as a group of DER(s) and loads which can be intentionally disconnected
from and reconnected to the grid. In this context, the grid is formally defined as an area electric
power system (area EPS).
An EPS consists of the required transmission and distribution facilities needed to deliver elec-
tric power to a load. In many jurisdictions, an area EPS would be synonymous to a utility (where
the EPS also includes power sources), while a local EPS would be a building, facility, or campus,
which may or may not include power sources.
Note that the IEEE definitions allow for a single microgrid to be composed of a group of
EPSs, which may include both local and area EPSs, and also allows for nesting and overlapping of
local EPSs. However, discussion in this guide is limited to those microgrids consisting of a single
local EPS only. Additionally, while DER as defined in this guide includes demand response
assets, the IEEE definition does not explicitly include DR.
Figure 9.2 explains the IEEE interconnection terms and relationships within an area EPS. In
this figure, local EPS 2 has both generation and load. For this local EPS to be a microgrid, it
would also require an intentional island interconnection device (IIID) at the point of common
Figure 9.2 Relationship of IEEE DER interconnection terms.
coupling (PCC). An IIID must be capable of safely and effectively connecting and disconnecting
the local EPS from the area EPS based on a signal from the microgrid controller.
9.1.2 Role of the Microgrid Controller

The microgrid controller is the automated system within a microgrid whose primary function is
to signal to the IIID when to connect or disconnect from the area EPS. At a minimum, the
microgrid controller must trigger a disconnect from the area EPS based on fault detection, sched-
ule, or manual control.
Beyond this, there are several additional functions which a microgrid controller may perform,
including:
• Managing curtailing or exporting locally produced power to the grid when in excess of loads,
• Managing import of power from the grid to supplement local sources and/or replenish local
energy storage,
• Operating storage and dispatchable resources (such as generators, fuel cells, or CHP),
• Shedding loads to prevent local grid collapse when sufficient power is not available, and
• Communicate with the grid operator to transact ancillary products such as demand response,
frequency response, and reactive power regulation.
122 | Microgrids
9.1.3 Differences from Backup Power

While a microgrid may seem like simply a backup power supply that allows for a diversity of
sources (rather than a single generator), there are a few key differences which set them apart.
First, a backup generator is designed to operate only when the grid is not available. Indeed, in
many jurisdictions, local air pollution laws do not allow backup generators to be run except when
the grid is down or for routine annual testing (for instance, see the California Diesel Risk Reduc-
tion Plan or New York Codes, Rules, and Regulations, Title 6, Part 231 (NY-CRR 2011), which
establish upper limits on runtime of generators intended for provision of backup power).
Second, due to this design intent, many backup generators lack the functionality required by
IEEE 1547 for automatic, seamless reconnection to the area EPS following an outage. This is
inherent to the nature of a backup generator; it only runs when the grid is not available, and thus
has no need to synchronize with the grid. Its only interaction with the grid is to detect when it is
not energized. In contrast, inherent in the design of a microgrid is the ability to interact with the
grid; the microgrid must be synchronous with the grid so that it can export excess power from
local sources or supplement local sources with grid power when local demand exceeds supply.
9.1.4 Grid Services Advantages

(Including DR and Load Management)
Depending on the technical capabilities of the microgrid controller and the local regulatory
and market environment, a building or campus with a microgrid can take advantage of any of the
grid services opportunities discussed in Chapter 3. This is due to the nature of a microgrid as a
collection of DER assets, along with the benefits those assets already provide on their own.
By aggregating these assets through a microgrid controller, a building can further optimize
when and how each of these benefits is pursued, either to maximize profit, minimize costs, or
reduce carbon emissions, among other possible motivations.
Any DER connected to the grid is required to comply with IEEE 1547, and thus there are
certain conditions under which it will be required to cease energizing the area EPS—that is, it
must disconnect from the grid. For many buildings or campuses, these same conditions would also
result in loss of power to internal loads.
With a microgrid, however, a building can satisfy the requirement to disconnect from the area
EPS (i.e., the grid), while continuing to serve loads in the local EPS—that is, to operate as a
microgrid in intentional island mode.
9.2 INTENTIONAL ISLANDING AND RESILIENCE

Intentional islanding is the ability of a microgrid to seamlessly connect and disconnect from
the grid without causing disruption to either the local or area EPS. The ability to island, and the
resilience which this provides, is often one of the key motivating factors guiding the decision to
establish a microgrid.
The transition may be initiated manually, on schedule, or when abnormal conditions are
detected. IEEE 1547 lists several reasons that a microgrid operator may choose to schedule a
transition to an intentional island, including (IEEE 2018):
• Enhanced reliability
• Economic dispatch
• Preemptive isolation in anticipation of severe weather or other events
Critically, the standard does not limit circumstances under which intentional islanding can be
performed; as long as the transition requirements are met, the microgrid is free to island when and
how the operator wishes.
For an unscheduled transition to intentional island, one of four conditions must be met:
• Occurrence of a qualifying voltage disturbance (as defined by the area EPS operator)
• Occurrence of a qualifying frequency disturbance (as defined by the area EPS operator)
• Occurrence of a short-circuit fault on the area EPS
• Detection of an open-phase condition at the PCC
9.3 ADDITIONAL MOTIVATIONS TO ESTABLISH A MICROGRID

While any of the previously discussed advantages may be sufficient motivation to establish a
microgrid, the flexibility of microgrids means that a few other motivating factors may also exist,
depending on the siting or needs of a proposed building, including:
• A large portion of the load will require continuous (backup) power, whether due to an
unreliable grid or criticality of loads. While a microgrid is distinct from a backup power
system, it can provide this functionality. Additionally, by allowing the flexibility to integrate
multiple power sources, a microgrid can provide backup power for longer time periods than a
standby generator, which may be limited to on-site fuel supplies. A microgrid using wind,
solar, or hydropower can potentially operate indefinitely (though this may be limited by
factors of weather and climate).
• Process heat or steam is required. Because microgrids generate power locally, the heat from
any thermal-based power supplies, such as a fuel cell, microturbine, or genset, will also be
available locally and can be incorporated into process heat systems. By integrating such CHP
systems through a microgrid (rather than as an isolated DER), their value can be leveraged.
For example, a back-up power system alone, or a CHP system alone, may not make sense, but
in many cases, combining the two functions as a microgrid may reduce costs and increase total
benefits.
• There is an abundant supply or availability of DERs. If a significant amount of on-site power
is already being considered, or if the proposed building could take advantage of rich solar,
wind, or hydro resources, integrating these resources with a microgrid is a cost-effective
solution to use the power supply while also bringing the additional benefits of a microgrid to
bear. Many solar power systems already include much of the infrastructure that would be
required to establish a microgrid. Given the additional benefits that a microgrid could supply,
the added benefits may outweigh the additional cost.
9.4 DESIGN CONSIDERATIONS

In addition to covering interconnection requirements of microgrids (along with DERs in gen-
eral) in IEEE 1547-2018, IEEE also provides two other documents that provide guidelines when
considering a microgrid for a building or campus.
9.4.1 IEEE 1547.4-2011

Section 5 of IEEE 1547.4-2011 provides a list of design criteria to consider when planning a
microgrid. These criteria fall into a few basic categories:
124 | Microgrids
• Load Requirements and Planning. When islanded, a microgrid must provide all requirements
of the internal loads, such as power quality and voltage and frequency regulation, which are
normally provided by the grid. Thus, the requirements of all planned loads must be known.
Additionally, because the power sources within a microgrid will inherently have less capacity
than the grid, allowance must be made to alternate starting of heavy loads when islanded to
avoid overwhelming local supply. For a microgrid without sufficient power to supply all loads,
a load prioritization scheme and load-shedding methodology must be designed.
• Area Power System Requirements. The manner in which the microgrid coordinates with the
grid (the area EPS) must be planned and coordinated. When transitioning in and out of
island mode, responsibilities for system grounding, voltage and frequency regulation,
protection, and power quality will be handed back and forth.
• DER Requirements and Capabilities. Similarly to load planning, the requirements and
capabilities of the proposed energy resources must also be clearly delineated. This includes
voltage and frequency control and load sharing if multiple DERs will be part of the microgrid.
• Operating Procedures. Guidelines for building operations procedures will need to be
developed for each of the four states in which a microgrid can operate: Normal parallel
operation, transition-to-island mode, island mode, and reconnection mode. Regular testing of
all components and of the various transitions will need to be planned for.
9.4.2 IEEE 2030.9-2019

IEEE 2030.9 defines an iterative process of microgrid planning, starting with definition of
system objectives (including economic benefits, reliability, and environmental concerns). Once
one or more options have been developed which meet the objectives, a series of tests and simula-
tions are prescribed for evaluation and comparison in order to select the best option.
Specific guidelines are provided for the following steps in microgrid design, which include:
• Voltage level selection, based on capacity of internal power sources and the voltage level of the
area EPS
• Grid structure selection (loop, radial, etc.) based on criticality of loads and location of
resources
• Protection configuration based on capacity, voltage level, grounding mode, and fault current
level
• Design of monitoring, control, and energy management system to optimize scheduling and
economic dispatch. This system includes local control at each DER in the microgrid,
coordinated control between microgrid elements, and an energy management layer for
adjusting long-term set points and microgrid priorities. Each aspect of the control system will
need to be configured for all microgrid operation modes.
• Design of power quality management system, including such components as reactive power
compensation, synchronous compensators, and/or power filters.
• Selection and design of communication system used for microgrid control and coordination
with other building systems and/or the area EPS operator. Security considerations will also
factor heavily into the design of the communication system.
Once these systems have been designed, IEEE 2030.9 provides criteria for technical evalua-
tion (reliability, grid loss, and power quality), economic evaluation (life cycle cost, payback time,
and net present value), and environmental evaluation (local emissions, grid emission reduction,
and fossil fuel consumption). Finally, an example of a microgrid plan and design is provided,
applying the principles within the standard.
9.4.3 HOMER Microgrid Design Software

Hybrid Optimization of Multiple Energy Sources (HOMER) is a software tool originally
developed at the NREL to aid in the design and optimization of microgrids (NREL n.d.). Users
enter variables such as the size, location, and expected energy consumption of their facility, the
types of energy resources being considered and their costs, operating schedules, utility tariffs, and
any available incentives. HOMER then runs an optimization with varying sizes of solar arrays,
battery storage systems, fuel cells, or the other components being considered to determine initial
capital cost and net present cost for each feasible combination. For each scenario analyzed, the
potential demand charge reduction, incentive payments, and value-stacking opportunities are also
provided. With this information, users can determine the best mix of resources, and best capacity
of those resources, to meet the project goals.
9.5 MULTI-USER MICROGRIDS

Multi-user microgrids (MUMs), or public-purpose microgrids, represent an emerging area of
research. Unlike a conventional microgrid, an MUM consists of buildings and DER assets owned
by multiple entities cooperating to pool resources and provide resiliency benefits for the broader
community. Often an MUM will be established to ensure that critical infrastructure remains on-
line during a grid outage.
As an example, the Olney Town Center in Olney, MD, is a MUM with 3.6 MW of natural
gas generation, 1.8 MW of PV, and a 728 kW/12 hour battery (Burr et al. 2017). The microgrid
users include a hospital, police station, fire station, school, grocery store, and water tower.
Depending on operation, power for microgrid users can be sustained for up to several weeks while
islanded.
While a number of regulatory and organizational hurdles can make establishing a MUM
challenging (Fabrizio et al. 2018), developers and planners considering a microgrid in an area with
existing or proposed critical infrastructure or public safety institutions may wish to investigate
options for a MUM. Specifically, a building proposed with DER could include the necessary
design features required to join an MUM at a later date. At a minimum, this would include the
design considerations discussed in this chapter for establishing a conventional (single user) micro-
grid. Additionally, a focus on decentralized control (where constant communication with the cen-
tralized controller is not critical) would help to ensure compatibility.
GLOSSARY
Note: all definitions are from ASHRAE Terminology (www.ashrae.org/terminology), unless other-
wise specified.
Advanced inverter: Inverters which can modulate output and communicate actively with grid
operators (CPUC 2017).
Alternating current (ac): Electric current in an electrical circuit that periodically reverses polarity.
Beneficial electrification: A term for replacing direct fossil fuel use (e.g., propane, heating oil, gas-
oline) with electricity in a way that reduces overall emissions and energy costs. There are many
opportunities across the residential and commercial sectors. This can include switching to an elec-
tric vehicle or an electric heating system - as long as the end-user and the environment both ben-
efit (EESI n.d.).
Building automation system (BAS): An energy management system, usually with additional capa-
bilities, relating to the overall operation of the building in which it is installed, such as equipment
monitoring, protection of equipment against power failure, and building security.
Carbon offset: an action or activity (such as the planting of trees or carbon sequestration) that
compensates for the emission of carbon dioxide or other greenhouse gases to the atmosphere
(Merriam-Webster n.d.).
127
128 | Glossary
Combined heat and power (CHP): A system combining power production with the use of a lower-
quality heat byproduct of power generation for district heating.
Coincident demand: The metered demand of a device, circuit, or building that occurs at the same
time as the peak demand of the building or facility or at the same time as some other peak of
interest, such as a utility’s system load. This should properly be expressed so as to indicate the
peak of interest (e.g., “demand coincident with the building peak.”)
Conservation: A reduction in energy consumption that corresponds with a reduction in service

demand. Service demand can include buildings-sector end uses such as lighting, refrigeration, and
heating; industrial processes; or vehicle transportation. Unlike energy efficiency, which is typically
a technological measure, conservation is better associated with behavior. Examples of conserva-
tion include adjusting the thermostat to reduce the output of a heating unit, using occupancy sen-
sors that turn off lights or appliances, and car-pooling (EIA 2019c).
Cool thermal storage: See thermal energy storage.
Cooperatively owned utility: An electric utility legally established to be owned by and operated for
the benefit of those using its service. The utility company will generate, transmit, and/or distrib-
ute supplies of electric energy to a specified area not being serviced by another utility. Such ven-
tures are generally exempt from Federal income tax laws. Most electric cooperatives have been
initially financed by the Rural Utilities Service (prior Rural Electrification Administration), U.S.
Department of Agriculture (EIA 2019c).
Critical peak price (CPP): When utilities observe or anticipate high wholesale market prices or
power system emergency conditions, they may call critical events during a specified time period
(e.g., 3 p.m. to 6 p.m. on a hot summer weekday), the price for electricity during these time peri-
ods is substantially raised. Two variants of this type of rate design exist: one where the time and
duration of the price increase are predetermined when events are called and another where the
time and duration of the price increase may vary based on the electric grid’s need to have loads
reduced (DOE 2009).
Critical peak rebate: When utilities observe or anticipate high wholesale market prices or power
system emergency conditions, they may call critical events during prespecified time periods (e.g.,
3 p.m. to 6 p.m. summer weekday afternoons), the price for electricity during these time periods
remains the same but the customer is refunded at a single, predetermined value for any reduction
in consumption relative to what the utility deemed the customer was expected to consume (DOE
2009).
Demand (electric): (1) the time rate of energy flow. In the United States, demand usually refers to
electric power and is measured in kW (equals kWh/h) but can also refer to natural gas, usually as
therms or centum cubic feet (ccf) per day. In many other countries, demand is commonly used
with other energy sources, especially district heat, (2) the highest amount of power (average Btu/h
over an interval) recorded for a building or facility in a selected time frame.
Demand response: Demand response programs are incentive-based programs that encourage elec-
tric power customers to temporarily reduce their demand for power at certain times in exchange
for a reduction in their electricity bills. Some demand response programs allow electric power sys-
tem operators to directly reduce load, while in others, customers retain control. Customer-con-
trolled reductions in demand may involve actions such as curtailing load, operating on-site
generation, or shifting electricity use to another time period. Demand response programs are one
type of demand-side management, which also covers broad, less immediate programs such as the
promotion of energy-efficient equipment in residential and commercial sectors (EIA 2019c).
Demand response aggregator: Any marketer, broker, public agency, city, county, or special district
that combines the loads of multiple end-use customers in negotiating the purchase of electricity,
the transmission of electricity, and other related services for these customers (EIA 2019c).
Demand side management: A utility action that reduces or curtails end-use equipment or pro-
cesses. DSM is often used in order to reduce customer load during peak demand and/or in times
of supply constraint. DSM includes programs that are focused, deep, and immediate such as the
brief curtailment of energy-intensive processes used by a utility's most demanding industrial cus-
tomers, and programs that are broad, shallow, and less immediate such as the promotion of
energy-efficient equipment in residential and commercial sectors (EIA 2019c).
Direct current (dc): electric current in an electrical circuit that does not reverse polarity. Note: direct
current is said to flow from positive to negative, but electrons travel from negative to positive.
Distributed energy resources (DERs): A source or sink of power that is located on the distribution
system, any subsystem thereof, or behind a customer meter. These resources may include, but are
not limited to, electric storage resources, distributed generation, thermal storage, and electric
vehicles and their supply equipment (FERC 2018b).
Electric vehicle supply equipment (EVSE): The conductors, including the ungrounded, ground,
and equipment grounding conductors and the electric vehicle connectors, attachment plugs, and
all other fittings, devices, power outlets or apparatus installed specifically for the purpose of deliv-
ering energy from the premises wiring to the electric vehicle (NFPA 2017).
Energy attribute certificate: A market-based instrument that represents the property rights to the
environmental, social and other non-power attributes of renewable electricity generation. EAC is
the general term, while some regions of the world use other terms. For instance, in North Amer-
ica, the similar instrument is called a renewable energy certificate (REC). RECs are issued when
one megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a
renewable energy resource (EPA 2019b).
130 | Glossary
Energy efficiency: Refers to programs that are aimed at reducing the energy used by specific end-
use devices and systems, typically without affecting the services provided. These programs reduce
overall electricity consumption (reported in megawatthours [MWh]), often without explicit con-
sideration for the timing of program-induced savings. Such savings are generally achieved by sub-
stituting technologically more advanced equipment to produce the same level of end-use services
(e.g. lighting, heating, motor drive) with less electricity. Examples include high-efficiency appli-
ances, efficient lighting programs, high-efficiency heating, ventilating and air conditioning
(HVAC) systems or control modifications, efficient building design, advanced electric motor
drives, and heat recovery systems (EIA 2019c).
Facility: Any kind of building or collection of buildings, and all of the electrical loads or local gen-
eration sources contained within them or controlled by the facility owner (ASHRAE 2016b).
Flywheel: Electricity is used to accelerate a flywheel (a type of rotor) through which the energy is
conserved as kinetic rotational energy. When the energy is needed, the spinning force of the fly-
wheel is used to turn a generator. Some flywheels use magnetic bearings, operate in a vacuum to
reduce drag, and can attain rotational speeds up to 60,000 revolutions per minute (EIA 2019c).
Frequency regulation: A service that dampens the momentary fluctuations in grid frequency
caused by the difference between load and supply (Rosewater and Ferreira 2016).
Fuel cell: A device capable of generating an electrical current by converting the chemical energy of
a fuel (e.g., hydrogen) directly into electrical energy. Fuel cells differ from conventional electrical
cells in that the active materials such as fuel and oxygen are not contained within the cell but are
supplied from outside. It does not contain an intermediate heat cycle, as do most other electrical
generation techniques (EIA 2019c).
Green building: Also known as sustainable or high-performance building, green building is the
practice of increasing the efficiency with which buildings and their sites use and harvest energy,
water, and materials; and protecting and restoring human health and the environment, through-
out the building life-cycle: siting, design, construction, operation, maintenance, renovation and
deconstruction (EIA 2019c).
Grid resiliency: see resiliency.
Independent system operator: An independent, federally regulated entity established to coordinate

regional transmission in a non-discriminatory manner and ensure the safety and reliability of the
electric system (EIA 2019c).
Insolation: solar radiation incident on the solar collector.
Intentional island interconnection device: Intentional islanding operation may be desired in cases
where the central grid is prone to reliability problems. In this case, the interconnection is designed
to permit the mini-grid to continue operating autonomously and provide uninterrupted service to
local customers during outages on the main grid. Usually, protective devices must be reconfigured
automatically when transitioning between islanded and grid-connected modes. In addition,
islanding systems must include provisions to shed load that exceeds the local generation capacity
when operating in islanded mode. Policy regarding interconnection of previously autonomous
mini-grids should allow for maintaining future capability to operate autonomously, provided this
can be done safely (Greacen et al. 2013).
Interconnection: Two or more electric systems having a common transmission line that permits a
flow of energy between them. The physical connection of the electric power transmission facilities
allows for the sale or exchange of energy (EIA 2019c).
Inverter: A device that converts direct current electricity to alternating current either for stand-
alone systems or to supply power to an electricity grid (DOE 2019b).
Investor-owned utility: A privately-owned electric utility whose stock is publicly traded. It is rate
regulated and authorized to achieve an allowed rate of return (EIA 2019c).
Island operation: Islanding refers to the condition in which a portion of the grid becomes tempo-
rarily isolated from the main grid but remains energized by its own distributed generation
resource(s). Islanding may occur accidentally or deliberately. Traditionally, islanding has been seen
by utilities as an undesirable condition due to concerns about safety, equipment protection, and
system control. Utilities' concerns about unintentional islanding have been a major impediment to
the widespread adoption of distributed generation. For the most part, these concerns have been
addressed through anti-islanding features in grid interactive inverters and the provisions included
in standards such as Underwriters Laboratories (UL) 1741 and IEEE 1547 (Greacen et al. 2013).
Load factor: (1) comparison of electricity use to electric demand for a given time period, calculated
by dividing electricity usage in kilowatt hours (kWh) by the product of electric demand in kilo-
watts (kW) times the hours in the period, (2) ratio of average load in kilowatts supplied during a
designated period to the peak or maximum load in kilowatts occurring in that period.
Microgrid: A group of interconnected loads and distributed energy resources within clearly
defined electrical boundaries that acts as a single controllable entity with respect to the grid (Ton
and Smith 2012).
132 | Glossary
Municipal utility: A power utility system owned and operated by a local jurisdiction (CEC n.d.).
Net metering: To connect (a customer’s alternative power-generating system) to a public utility’s

power grid to offset the cost of power drawn by the customer from the grid (Dictionary n.d.).
Off-grid operation: see island operation.
OpenADR: Open Automated Demand Response (OpenADR) is an open and standardized way
for electricity providers and system operators to communicate DR signals with each other and
with their customers using a common language over any existing IP-based communications net-
work, such as the Internet (OpenADR Alliance 2012).
Peak time rebate: see critical peak rebate.
Point of common coupling (PCC): A microgrid connects to the grid at a point of common coupling
that maintains voltage at the same level as the main grid unless there is some sort of problem on the
grid or other reason to disconnect (Source: https://www.energy.gov/articles/how-microgrids-work).
Power factor: (1) factor equal to the cosine of the phase angle between voltage and current, by
which the product of voltage and current is multiplied to convert volt amperes to power in watts.
(2) ratio of real power (kW) to apparent power (kVA) at any given point and time in an electrical
circuit. Generally expressed as a percentage.
Qualifying facility (QF): A cogeneration or small power production facility that meets certain
ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Com-
mission (FERC) pursuant to the Public Utility Regulatory Policies Act (PURPA) (EIA 2019c).
Reactive power: Portion of apparent power that does no work. It is measured commercially in
kilovars. Reactive power must be supplied to most types of magnetic equipment, such as motors.
It is supplied by generators or by electrostatic equipment such as capacitors.
Regional transmission organization: A utility industry concept that the Federal Energy Regula-
tory Commission (FERC) embraced for the certification of voluntary groups that would be
responsible for transmission planning and use on a regional basis (EIA 2019c).
Renewable energy: Energy obtained from sunlight, wind, earth, geothermal sources, or bodies of
water to provide heating, cooling, lighting, or water-heating services to buildings.
Renewable energy certificate: See energy attribute certificate.
Resiliency: The ability to prepare for and adapt to changing conditions and withstand and recover
rapidly from disruptions. Resilience includes the ability to withstand and recover from deliberate
attacks, accidents, or naturally occurring threats or incidents (SNL n.d.).
Smart grid: A modernized grid that enables bidirectional flows of energy and uses two-way com-
munication and control capabilities that will lead to an array of new functionalities and applica-
tions (NIST 2014b).
Smart inverter: See advanced inverter.
Solar insolation: see insolation.
Thermal energy storage (TES): (1) thermal energy storage may refer to a number of technologies
that stores energy in a thermal reservoir for later reuse. They can be employed to balance energy
demand between day time and night time. The thermal reservoir may be maintained at a tem-
perature above (hotter) or below (colder) than that of the ambient environment. The principal
application today is the production of ice, chilled water, or eutectic solution at night, which is then
used to cool environments during the day. (2) thermal energy storage technologies store heat, usu-
ally from active solar collectors in an insulated repository for later use in space heating, domestic
or process hot water, or to generate electricity. Most practical active solar heating systems have
storage for a few hours to a day's worth of heat collected. There are also a small but growing num-
ber of seasonal thermal stores used to store summer heat for space heating during winter.
Time-of-use (TOU) rate: Electricity prices that vary depending on the time periods in which the
energy is consumed. In a time-of- use rate structure, higher prices are charged during utility peak-
load times. Such rates can provide an incentive for consumers to curb power use during peak
times (CEC n.d.).
Transactive energy (TE): A system of economic and control mechanisms that allows the dynamic
balance of supply and demand across the entire electrical infrastructure using value as a key opera-
tional parameter (NIST 2017).
134 | Glossary
Variable-frequency drive: Variable-frequency drives (VFDs), the most common type of adjustable
speed drive (ASD), are solid-state electronic motor controllers that efficiently meet varying pro-
cess requirements by adjusting the frequency and voltage of power supplied to an alternating cur-
rent (ac) motor to enable it to operate over a wide speed range. External sensors monitor flow,
liquid levels, or pressure and then transmit a signal to a controller that adjusts the frequency and
speed of the motor to match process requirements (DOE n.d.b).
Virtual top node (VTN): The Virtual Top Nodes (VTN) is an information exchange server. This
server can be located at the highest infrastructure level (e.g. Utility Company), at an aggregator
level, or at the managed facility. Each VTN can have 1-N VENs. Commonly VTNs are reason-
ably powerful computer systems (OpenADR Alliance n.d.).
Virtual End Node (VEN): The Virtual End Nodes (VEN) are clients to one or more VTN and can
be located one level below any of the suitable VTN locations. VENs can be simple devices like
load controllers, thermostats or more powerful implementations like energy management systems
or aggregator level control servers (OpenADR Alliance n.d.).
Voltage: Electric potential or potential difference expressed in volts.
Voltage drop: A decrease in voltage caused by losses in the lines connecting the power source to the
load.
ACRONYMS
ac Alternating current
ADR Automated demand response
AIA American Institute of Architects
AMI Advanced metering infrastructure
ANSI American National Standards Institute
API Application programming interface
ARCnet Attached Resource Computer Network
ASCE American Society of Civil Engineers
BACnet Building Automation and Control Network
BAS Building automation system
BESS Battery energy storage systems
BQDM Brooklyn-Queens Demand Management
BTM Behind-the-meter
CAISO California Independent System Operator
CAV Constant air volume
CEC California Energy Commission
CHP Combined heat and power
CP Coincident peak
CPP Critical peak pricing
CPR Critical peak rebate
CPU Central processing unit
CPUC California Public Utility Commission
CSA Canadian Standards Association
DALI Digital Addressable Lighting Interface
DDC Direct digital control
dc Direct current
DER Distributed energy resources
135
136 | Acronyms
DERMS Distributed Energy Resource Management System

DNP Distributed Network Protocol
DOE U.S. Department of Energy
DR Demand response
DRQAT Demand Response Quick Assessment Tool
DSM Demand-side management
DX Direct Expansion
EAC Energy Attribute Certificates
EMC Electronic message center
EMIS Energy Management Information Systems
EMS Energy management system
EPA Environmental Protection Agency
EPRI Electric Power Research Institute
EPS Electric power systems
EPSA Electric Power Supply Association
ERCOT Electric Reliability Council of Texas
ESCO Energy supply company
ESI Energy services interface
EV Electric vehicle
EVSE Electric Vehicle Supply Equipment
FERC Federal Energy Regulatory Commission
FSGIM Facility Smart Grid Information Model
GSHP Ground Source Heat Pump
GW Gigawatt
HERA Hawaii Electricity Reliability Administrator
HECO Hawaiian Electric Company, Inc.
HUD Hours use demand
HVAC Heating, ventilation, and air conditioning
ICC International Code Council
ICS Industrial Control Systems
IEC International Electrotechnical Commission
IES Illuminating Engineering Society
IEEE Institute of Electrical and Electronics Engineers
IgCC International Green Construction Code
IGO Independent grid operator
IIID Intentional island interconnection device
IoT Internet of Things
IOU Investor-owned utility
IP Internet protocol
ISO International Organization for Standardization
ISO Independent System Operator

ISO-NE ISO New England
KIUC Kauai Island Utility Cooperative
kVA Kilovolt-amperes
kVAR Kilovolt-amperes reactive
kW Kilowatts
kWh Kilowatt-hours
LBNL Lawrence Berkeley National Laboratory
LCO Load control object
LED Light emitting diode
LEED Leadership in Energy and Environmental Design
LMP Locational marginal price
MISO Midcontinent Independent System Operator, Inc.
MMU Multi-user microgrids
MPC Model predictive control
NARUC National Association of Regulatory Utility Commissioners
NCP Non-coincident peak
NEC National Electrical Code
NEMA National Electrical Manufacturers Association
NER North American Electric Reliability Corporation
NESC National Electrical Safety Code
NFPA National Fire Protection Association
NIST National Institute of Standards and Technology
NREL National Renewable Energy Laboratory
NWA Non-wires alternatives
NWS Non-wires solution
NYISO New York ISO
OpenADR Open Automated Demand Response
OSI Open Systems Interconnection
PBR Performance based regulation
PCC Point of common coupling
PCI Performance cost index
PCM Phase change materials
PJM PJM Interconnection
PKI Public key infrastructure
PNNL Pacific Northwest National Laboratory
PoC Point of DER Connection
PPA Purchase power agreement
PUC Public Utility Commission
PURPA Public Utilities Regulatory Policies Act
138 | Acronyms
PV Photovoltaic
QF Qualifying facility
REV Reforming the Energy Vision
RTO Regional transmission organization
RTP Real time pricing
RTU Rooftop unit
SCADA Supervisory Control and Data Acquisition
SEER Seasonal energy efficiency ratio
SEPA Smart Electric Power Alliance
SGIP Self-Generation Incentive Program
SG-WG Smart Grid Working Group
SPP Southwest Power Pool
SSL Secure socket layer
TCP Transmission control protocol
TES Thermal energy storage
TCP/IP Transmission Control Protocol/Internet Protocol
TLED Tubular Light-Emitting Diode
TOU Time of use
TVA Tennessee Valley Authority
UL Underwriters Laboratory
UPS Uninterruptible Power Supply
USGBC U.S. Green Building Council
V Volt
VAR Volt-amperes reactive
V2G Vehicle-to-grid
VAV Variable-air-volume
VEN Virtual End Node
VFD Variable-frequency drive
VRF Variable-refrigerant flow
VTN Virtual Top Node
XML eXtensible Mark-up Language
BIBLIOGRAPHY
Chapter 1
DOE. 2008. Smart grid primer (Smart grid books). Washington, DC: Department of Energy.
https://www.energy.gov/oe/technology-development/smart-grid/smart-grid-primer-smart-
grid-books.
DOE. 2008. What the smart grid means to Americans. Accessed September 2019. Washington,
DC: Department of Energy. https://www.energy.gov/sites/prod/files/oeprod/
DocumentsandMedia/ConsumerAdvocates.pdf.
Kempener, R., P. Komor, and A. Hoke. 2013. Smart grids and renewables: A guide for effective
deployment. Abu Dhabi, UAE: International Renewable Energy Agency. Accessed August
2019. https://www.irena.org/documentdownloads/publications/smart_grids.pdf.
Chapter 2
DOE. 2015. United States electricity industry primer. DOE/OE-0017. Washington, D.C.:
Department of Energy Office of Electricity Delivery and Energy Reliability. Accessed May
2019. https://www.energy.gov/sites/prod/files/2015/12/f28/united-states-electricity-
industry-primer.pdf.
HSEO. 2019. Evaluation of utility ownership and regulatory models for Hawaii. Honolulu:
Hawaii State Energy Office. Accessed June 2019. https://energy.hawaii.gov/wp-content/
uploads/2019/06/HI_DBEDT_UtilityModelStudy.pdf.
LBNL. 2017. 2025 California demand response potential study—Charting California’s demand
response future: Final report on Phase 2 results. LBNL-2001113. Berkeley, CA: Lawrence
Berkeley National Laboratory. http://eta-publications.lbl.gov/sites/default/files/lbnl-
2001113.pdf.
Chapter 3
Couture, T.D., K. Cory, C. Kreycik, and E. Williams. 2010. A policymaker’s guide to feed-in tariff
policy design. Technical Report NREL/TP-6A2-44849. Golden, CO: National Renewable
Energy Laboratory. Accessed August 2019. https://www.nrel.gov/docs/fy10osti/44849.pdf.
139
140 | Bibliography
GridWise® Architecture Council. 2018. Transactive energy systems research, development, and
deployment roadmap. PNNL-26778. Richland, WA: Pacific Northwest National Laboratory.
Lazar, J., and W. Gonzalez. 2015 Smart rate design for a smart future. Montpelier, VT: Regulatory
Assistance Project. http:/www.raponline.org/document/download/id/7680.
Ma, O. 2013. Demand response for ancillary services. IEEE Transactions on Smart Grid 4(4):
1988-95. Piscataway, NJ: Institute of Electrical and Electronics Engineers.
McCormick, D. October 18, 2017. “5 tips to lower your commercial utility bill.” National Resource
Management, Inc.’s All-Things-Refrigeration Blog. Accessed August 2019. http://
www.nrminc.com/blog/5-tips-to-lower-your-commercial-utility-bill/.
NARUC Staff Subcommittee on Rate Design. 2016. Distributed energy resources rate design and
compensation. https://www.naruc.org/rate-design/.
NIST. 2017. Transactive energy: An overview. Gaithersburg, MD: National Institute of
Standards and Technology. https://www.nist.gov/engineering-laboratory/smart-grid/
transactive-energy-overview.
SEIA. n.d. Net metering. Accessed August 2019. Washington, D.C.: Solar Energy Industries
Association. https://www.seia.org/initiatives/net-metering.
Staley, B. 2019. 10 simple ways to reduce business energy costs. SunPower Corporation. https://
businessfeed.sunpower.com/business-feed/10-simple-ways-to-reduce-business-energy-costs.
Zinaman, O., A. Aznar, C. Linvill, N. Darghouth, T. Dubbeling, and E. Bianco. n.d. Grid-
connected distributed generation: Compensation mechanism basics. Golden, CO: National
Renewable Energy Laboratory. Accessed August 2019. https://www.nrel.gov/docs/fy18osti/
68469.pdf.
Chapter 4
AFDC. n.d. Alternative fuels data center—Alternative fuels and advanced vehicles. Washington
D.C.: U.S. Department of Energy, Energy Efficiency and Renewable Energy. Accessed 2019.
https://afdc.energy.gov/fuels/.
AFDC. n.d. Alternative fuels data center—Availability of hybrid and plug-in electric vehicles.
U.S. Department of Energy, Energy Efficiency and Renewable Energy. Accessed 2019.
https://afdc.energy.gov/vehicles/electric_availability.html.
Alliance for Transportation Electrification. n.d. Accessed 2019. https://evtransportationalliance.org/.
Better Buildings Initiative. 2015. On-site commercial solar PV decision guide for the healthcare sector.
August 4, 2015. https://betterbuildingsinitiative.energy.gov/resources/site-commercial-solar-
pv-decision-guide-healthcare-sector.
Better Buildings Initiative. 2015. Promoting solar PV on leased buildings guide—Benefits barriers,
and strategies. Washington, DC: U.S. Department of Energy. October 2015. https://
betterbuildingssolutioncenter.energy.gov/sites/default/files/attachments/Promoting-Solar-
PV-on-Leased-Buildings-Guide-.pdf.
Better Buildings Initiative. n.d. Renewables integration. Washington, DC: U.S. Department of
Energy. Accessed 2019. https://betterbuildingssolutioncenter.energy.gov/alliance/
technology-solution/renewables-integration.
Better Buildings Initiative. 2016. Solar PV cost proposal template. Washington, DC: U.S.
Department of Energy. May 6, 2016. https://betterbuildingsinitiative.energy.gov/resources/
solar-pv-cost-proposal-template.
Better Buildings Initiative. 2016. Solar request for proposals & procurement guidance. Washington,
DC: U.S. Department of Energy. https://betterbuildingssolutioncenter.energy.gov/sites/
default/files/attachments/Template RFP Draft (050516).docx.
California Energy Commission. n.d. Rule 21 Smart Inverter Working Group. Accessed 2019.
https://www.energy.ca.gov/electricity_analysis/rule21/.
Camacho-Lopez, T. 2018. PV value. Sandia National Laboratories. https://energy.sandia.gov/
tag/pv-value/.
CPUC. n.d. Smart inverter working group. San Francisco, CA: California Public Utilities
Commission. Accessed 2019. http://www.cpuc.ca.gov/general.aspx?id=4154.
DOE. n.d. Fact sheet: 7 steps to selecting a power provider. Washington, DC: U.S. Department of
Energy’s Better Buildings Initiative. Accessed 2019. https://
betterbuildingssolutioncenter.energy.gov/sites/default/files/attachments/
Provider_Selection_Guide_Factsheet.pdf.
DOE. n.d. Energy storage computational tool. Washington, DC: U.S. Department of Energy.
Accessed June 2019. https://www.smartgrid.gov/recovery_act/analytical_approach/
energy_storage_computational_tool.html.
DOE. n.d. PVWatts® calculator. Washington, DC: U.S. Department of Energy. Accessed 2019.
https://pvwatts.nrel.gov/.
DOE. n.d. Frequently asked questions (FAQ): Commercial rooftop solar. Washington, DC:
U.S. Department of Energy’s Better Buildings Initiative. Accessed 2019. https://
betterbuildingsinitiative.energy.gov/sites/default/files/attachments/
BBA_Commercial_PV_Roofing_Guide_071715_508.pdf.
DOE. 2015. On-site commercial solar PV decision guide—For the hospitality sector. Washington,
DC: U.S. Department of Energy’s Better Buildings Initiative. https://
betterbuildingssolutioncenter.energy.gov/sites/default/files/attachments/Solar-PV-
Decision-Guide-For-Hospitality.pdf.
DOE and NREL. n.d. Technology Performance Exchange™. Washington, DC: U.S.
Department of Energy. Golden, CO: National Renewable Energy Laboratory. Accessed
2019. https://www.tpex.org/.
DOE and NREL. 2011. “Hybrid and plug-in electric vehicles. Washington, DC: U.S.
Department of Energy. Golden, CO: National Renewable Energy Laboratory. October 2011.
https://afdc.energy.gov/files/pdfs/52723.pdf.
Dorgan, C.E., and J.S. Elleson. 1994. ASHRAE’s new design guide for cool thermal storage.
ASHRAE Journal 36(5).
142 | Bibliography
DSIRE. n.d. Database of State Incentives for Renewables & Efficiency®. Accessed 2019. http://
www.dsireusa.org/.
DriveClean. n.d. PEV Resource Center. Accessed 2019. https://www.driveclean.ca.gov/pev/.
EGSA. n.d. Electrical Generating Systems Association. Accessed 2019. http://www.egsa.org/.
Electric Auto Association. n.d. Accessed 2019. http://www.electricauto.org/.
Energy.gov. n.d. Electric vehicles. Accessed 2019. https://www.energy.gov/eere/electricvehicles/
electric-vehicles.
Energy.gov. n.d. Solar information resources. Accessed 2019. https://www.energy.gov/eere/solar/
solar-energy-resource-center-0.
EPA. 2019. Combined heat and power (CHP) partnership. May 10, 2019. https://www.epa.gov/
chp.
EPA. 2019. DCHPP (CHP Policies and Incentives Database). https://www.epa.gov/chp/dchpp-
chp-policies-and-incentives-database.
Heat Is Power Trade Association. n.d. “Latest News.” Accessed 2019. http://
www.heatispower.org/.
EPRI. 2019. “EPRI: Storage Value Estimation Tool (StorageVET®).” Accessed June 2019.
https://www.storagevet.com/.
FCHEA. n.d. Fuel Cell and Hydrogen Energy Association. Accessed 2019. http://
www.fchea.org/.
FCTO. n.d. Fuel cells technology office. Accessed 2019. https://www.energy.gov/eere/fuelcells/
fuel-cell-technologies-office.
GoElectricDrive. 2018. November 21, 2018. https://goelectricdrive.com/.
IHFCA. n.d. International Hydrogen Fuel Cell Association. Accessed 2019. http://
www.ihfca.org.cn/.
Jiron, A., and K. Taddonio. 2014. On-site commercial solar PV decision guide. Washington,
DC: U.S. Department of Energy’s Better Buildings Solution Center. https://
betterbuildingssolutioncenter.energy.gov/sites/default/files/attachments/
On_Site_Solar_Decision_Guide.pdf.
deployment. Abu Dhabi, UAE. International Renewable Energy Agency. Accessed August
2019. https://www.irena.org/documentdownloads/publications/smart_grids.pdf.
LBNL. 2017. 2025 California demand response potential study—Charting California's demand
response future: Final report on Phase 2 results. LBNL-2001113. Berkeley, CA: Lawrence
Berkeley National Laboratory. http://eta-publications.lbl.gov/sites/default/files/lbnl-
2001113.pdf.
LBNL. 2019. Tracking the sun. Berkeley, CA: Lawrence Berkeley National Laboratory. https://
emp.lbl.gov/tracking-the-sun.
Ma, O. 2013. Demand response for ancillary services. IEEE Transactions on Smart Grid
4(4):1988–95.
Miller, T., with GE Power and Energy Storage Association. Telephone conversation, April 2019.
Mitchell, A., and J. Hibbs. 2017. On-site energy storage decision guide. Washington, DC: U.S.
Department of Energy’s Better Buildings Alliance. April 2017. https://
betterbuildingssolutioncenter.energy.gov/sites/default/files/attachments/BB Energy Storage
Guide.pdf.
NFCRC. n.d. National Fuel Cell Research Center. Irvine, CA: National Fuel Cell Research
Center. Accessed 2019. http://www.nfcrc.uci.edu/3/default.aspx.
NREL. n.d. Fuel cell power model. Golden, CO: National Renewable Energy Laboratory.
Accessed 2019. https://www.nrel.gov/hydrogen/fuel-cell-power-model.html.
NREL. n.d. Geospacial data science—Solar maps. Golden, CO: National Renewable Energy
Laboratory. Accessed 2019. https://www.nrel.gov/gis/solar.html.
NREL. n.d. National solar radiation data base. Golden, CO: National Renewable Energy
Laboratory. Accessed 2019. https://rredc.nrel.gov/solar/old_data/nsrdb/.
NREL. n.d. System advisor model (SAM). Golden, CO: National Renewable Energy
Laboratory. Accessed 2019. https://sam.nrel.gov/.
NREL. n.d. The open PV project. Golden, CO: National Renewable Energy Laboratory.
Accessed 2019. https://openpv.nrel.gov/.
NYSERDA. 2012. EV-ready codes for the built environment: Electric vehicle supply equipment
support study. NYSERDA PON 2392. Albany, NY: New York State Energy Research and
Development Authority. https://www.nyserda.ny.gov/-/media/Files/Programs/ChargeNY/
EV-Ready-Codes-for-the-Built-Environment.pdf.
OpenEI. 2017. Solar power. https://openei.org/wiki/Gateway:Solar.
Plug In America. n.d. Electric vehicle advocacy and education. Accessed 2019. https://
pluginamerica.org/.
Seal, B., A. Huque, L. Rogers, T. Key, C. Riley, H. Li, B. York, et al. 2016. Final report: Smart
grid ready PV inverters with utility communication. DOE-EPRI-5337. Washington DC: U.S.
Department of Energy Office of Scientific and Technical Information. https://www.osti.gov/
servlets/purl/1244268.
SEIA. 2019. U.S. solar market insight. Washington, DC: Solar Energy Industries Association.
https://www.seia.org/us-solar-market-insight.
SEPA. 2016. Beyond the meter: Distributed energy resources capability guide. Washington, DC:
Smart Electric Power Alliance.
SEPA. 2016. Beyond the meter: The potential for a new customer-grid dynamic. Washington, DC:
Smart Electric Power Alliance.
SEPA and Nexant. 2016. Beyond the meter: Address the locational valuation challenge for distributed
energy resources. Washington, DC: Smart Electric Power Alliance.
SunSpec. n.d. SunSpec Alliance. Accessed 2019. https://sunspec.org/.
144 | Bibliography
Chapter 5
Asthana, A., A. Booth, and J. Green. 2010. Best practices in the deployment of smart grid
technologies. McKinsey on Smart Grid: Summer 2010.
Eaton. 2014. Power factor correction: a guide for the plant engineer. Technical Data SA02607001E.
Cleveland, OH: Eaton.
Grant, R.L. 2010. “Smart grid implementation—Strategies for success.” IAEI News Magazine.
https://iaeimagazine.org/magazine/2010/09/16/smart-grid-implementation-strategies-for-
success/.
GridWise® Architecture Council. 2018. Transactive energy systems research, development, and
deployment roadmap. PNNL-26778. Richland, WA: Pacific Northwest National Laboratory.
deployment. Abu Dhabi, UAE: International Renewable Energy Agency. https://
www.irena.org/documentdownloads/publications/smart_grids.pdf.
Ma, O. 2013. Demand response for ancillary services. IEEE Transactions on Smart Grid
4(4):1988–95.
NEMA. 2011. Smart grid: Building on the grid. Volume 2. Rosslyn, VA: The National Electrical
Manufacturers Association. https://www.nema.org/Communications/Documents/
smartGrid_BuildingOnTheGrid_4web.pdf.
Nguyen, C. 2017. “Transactive energy: An overview.” Washington, DC: National Institute of
Standards and Technology. https://www.nist.gov/engineering-laboratory/smart-grid/
transactive-energy-overview.
Staley, B. 2019. “10 simple ways to reduce business energy costs.” SunPower Corporation. https://
businessfeed.sunpower.com/business-feed/10-simple-ways-to-reduce-business-energy-costs.
SunShot. n.d. Orange button. https://orangebuttondata.org/.
SunSpec Alliance. n.d. https://sunspec.org/sunspec-about/.
Watson, D.S., S. Kiliccote, N. Motegi, and M.A. Piette. 2006. Strategies for demand response in
commercial buildings. Proceedings of the 2006 ACEEE Summer Study on Energy Efficiency in
Buildings, 287–99. https://aceee.org/files/proceedings/2006/data/papers/
SS06_Panel3_Paper25.pdf.
Chapter 6
DOE. 2008. How the smart grid promotes a greener future. Washington, DC: U.S. Department of
Energy. https://www.energy.gov/sites/prod/files/oeprod/DocumentsandMedia/
Environmentalgroups.pdf.
Resilient Design Institute. n.d. https://www.resilientdesign.org/.
Thornley, V., and S. Mullins. 2011. Sustainable building, smartgrid-ready. Proceedings of the 2011
2nd IEEE PES International Conference and Exhibition on Innovative Smart Grid Technologies,
1–7. https://doi.org/10.1109/ISGTEurope.2011.6162625.
WBDG. 2018. Building resilience. Washington, DC: National Institute of Building Sciences.
https://www.wbdg.org/resources/building-resiliency.
Chapter 7
Asthana, A,. A. Booth, and J. Green. 2010. Best practices in the deployment of smart grid
technologies. McKinsey on Smart Grid: Summer 2010.
Bari, A., J. Jiang, W. Saad, and A. Jaekel. 2014. Challenges in the smart grid applications: An
overview. International Journal of Distributed Sensor Networks 10(2). https://journals.sagepub.com/
doi/full/10.1155/2014/974682.
NEMA. 2011. Smart grid: Building on the grid. Volume 2. The National Electrical Manufacturers
Association: Rosslyn, VA. https://www.nema.org/Communications/Documents/
Watson, D.S., S. Kiliccote, N. Motegi, and M.A. Piette. 2006. Strategies for demand response in
commercial buildings. Proceedings of the 2006 ACEEE Summer Study on Energy Efficiency in
Buildings, 287–99. https://aceee.org/files/proceedings/2006/data/papers/
SS06_Panel3_Paper25.pdf.
Chapter 8
DOE. 2019. Cybersecurity. https://www.smartgrid.gov/recovery_act/overview/
cyber_security.html.
DOE. 2019. Grid-interactive efficient buildings: Overview. Washington, DC: U.S. Department
of Energy. https://www.energy.gov/sites/prod/files/2019/04/f61/bto-geb_overview-
4.15.19.pdf.
Haiad, C. 2019. Seminar 11: Building HVAC system control strategies to interact with the
modern electric grid. Presented at the 2019 ASHRAE Winter Conference.
Chipley, M. 2017. Cybersecurity. http://www.wbdg.org/resources/cybersecurity.
NEMA. 2011. Smart grid: Building on the grid. Volume 2. Rosslyn, VA: The National Electrical
Manufacturers Association. https://www.nema.org/Communications/Documents/
NBI. 2015. The gridoptimal buildings initiative. Portland, OR: New Buildings Institute. https://
newbuildings.org/resource/gridoptimal/.
NIST. 2015. Guide to industrial control systems (ICS) security. NIST Special Publication 800-82.
Washington, DC: National Institute of Standards and Technology. https://www.nist.gov/
publications/guide-industrial-control-systems-ics-security.
Roth, A., J. Reyna, D. Vrabie, and D. Christensen. 2019. GEB Technical Report: Modeling,
Sensing, Control, and Analytics. Washington, DC: U.S. Department of Energy.
146 | Bibliography
Chapter 9
Abercrombie, R.K., T.B. Ollis, F.T Sheldon, and A.A. Jillepalli. 2019. Microgrid disaster
resiliency analysis: Reducing costs in continuity of operations (COOP) planning. Proceedings
of the Hawaii International Conference on System Sciences, 3532–41.
Adelfang, O. 2017. “So, what is a microgrid, exactly?” HOMER Microgrid News and Insight,
November 3, 2017. https://microgridnews.com/what-is-a-microgrid/.
Alderfer, B., M. Eldridge, and T. Starrs. 2000. Making connections: Case studies of interconnection
barriers and their impact on distributed power projects. NREL/SR-710-28053. Golden, CO:
National Renewable Energy Laboratory. https://doi.org/10.2172/755953.
Chen, O. 2016. “U.S. microgrid growth beats estimates: 2020 capacity forecast now exceeds 3.7
gigawatts.” https://www.greentechmedia.com/articles/read/u-s-microgrid-growth-beats-
analyst-estimates-revised-2020-capacity-project.
Danley, D. 2017. Technical standards for PV/storage/generator microgrids. Proceedings of the
2017 IEEE Global Humanitarian Technology Conference, 1–6, 2017. https://doi.org/10.1109/
GHTC.2017.8239303.
Holden, C. 2019. “What 2018 grid edge trends reveal about 2019.” https://www.greentechmedia.com/
articles/read/what-2018-grid-edge-trends-reveal-about-2019.
Lilienthal, P. 2018. “Microgrid value propositions revisited: Part one.” HOMER Microgrid News
and Insight. https://microgridnews.com/microgrid-value-propositions-revisited-part-one/.
Lilienthal, P. 2018. “Three phases in designing successful microgrid projects.” HOMER
Microgrid News and Insight. https://microgridnews.com/three-phases-in-designing-
successful-microgrid-projects/.
Rey, J.M., P.P. Vergara, J. Solano, and G. Ordóñez. 2019. “Design and optimal sizing of
microgrids.” In Microgrids Design and Implementation, edited by Antonio Carlos Zambroni de
Souza and Miguel Castilla, 337–67. Cham, Switzerland: Springer International Publishing.
https://doi.org/10.1007/978-3-319-98687-6_13.
Stark, K. 2019. “This East Bay energy startup is building microgrids for California’s fire stations.”
January 15, 2019. https://www.greentechmedia.com/articles/read/startup-microgrids-fire-
stations.
Thornley, V., and S. Mullins. 2011. Sustainable building, smartgrid-ready. Proceedings of 2011
2nd IEEE PES International Conference and Exhibition on Innovative Smart Grid Technologies,
1–7. https://doi.org/10.1109/ISGTEurope.2011.6162625.
REFERENCES
AEIC. 2018. Enabling smart inverters for distribution grid services. Joint IOU White Paper Series.
Birmingham, AL: The Association of Edison Illuminating Companies. https://aeic.org/wp-
content/uploads/2018/11/Joint-IOU-SI-White-Paper-Final-10-26-18.pdf.
Aghniaey, S., T. Lawrence, J. Mohammadpour, W. Song, R. Watson, and M. Boudreau. 2017.
Human factors and thermal comfort considerations with electrical demand response program
implementation. Presented at the 2017 CIBSE ASHRAE Technical Symposium,
Loughborough University, Loughborough, United Kingdom.
Akyol, B. A., J.N. Haack, C.H. Allwardt, K.E. Monson, and M.C. Roup. 2017. Security features
of VOLTTRON™ distributed sensing and control platform. PNNL-26560. Richland, WA:
Pacific Northwest National Laboratory.
AESC. 2017. Advanced controls and demand response for packaged HVAC units. Carlsbad,
CA: Alternative Energy Systems Consulting, Inc.
Arnold, D., M. Sankur, and M. Auslander. 2013. An architecture for enabling distributed plug
load control for commercial building demand response. Proceedings of 2013 IEEE PES
Innovative Smart Grid Technologies Conference, 1-6. Piscataway, NJ: Institute of Electrical and
Electronics Engineers.
ASCE. 2017. 2017 Infrastructure report card. Reston, VA: American Society of Civil Engineers
https://www.infrastructurereportcard.org/wp-content/uploads/2017/01/Energy-Final.pdf.
ASHRAE. n.d. ASHRAE terminology: Comprehensive glossary of terms for the built
environment. https://www.ashrae.org/technical-resources/free-resources/ashrae-terminology.
ASHRAE. 2010. ANSI/ASHRAE Standard 94.2-2010, Methods of testing thermal storage devices
with electrical input and thermal output based on thermal performance. Atlanta: ASHRAE.
ASHRAE. 2016a. ANSI/ASHRAE Standard 135-2016, BACnet™: A data communication
protocol for building automation and control networks. Atlanta, GA: ASHRAE.
ASHRAE. 2016b. ASHRAE Standard 201-2016, Facility smart grid information model. Atlanta,
GA: ASHRAE.
147
148 | References
ASHRAE. 2016c. ASHRAE handbook—HVAC systems and equipment. Atlanta, GA: ASHRAE.
ASHRAE. 2017. ANSI/ASHRAE Standard 55-2017, Thermal environmental conditions for
human occupancy. Atlanta: ASHRAE.
ASHRAE. 2018. IEEE Standard 1635-2018/ASHRAE Guideline 21-2018, Guide for the
ventilation and thermal management of batteries for stationary applications. Atlanta: ASHRAE.
Brambley, M. 2013. RTU network project. Washington, DC: U.S. Department of Energy’s
Office of Energy Efficiency and Renewable Energy. https://www.energy.gov/sites/prod/files/
2013/12/f5/emrgtech23_brambley_040413.pdf.
Burr, M., J. Camilleri, D. Lubkeman, Q. Long, and Y. Du. 2017. Microgrid optimized resource
dispatch for public-purpose resiliency and sustainability. DOE-MGI-00734. Washington, DC:
U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy. https://
www.osti.gov/biblio/1415998-microgrid-optimized-resource-dispatch-public-purpose-
resiliency-sustainability.
CAISO. 2016. What the duck curve tells us about managing a green grid. Folsom, CA:
California Independent System Operator.
California Plug-In Electric Vehicle Collaborative. 2013. Plug-in Electric Vehicle Charging Infrastructure
Guidelines for Multi-Unit Dwellings. https://www.ct.gov/deep/lib/deep/air/electric_vehicle/
CAPEV_-_Plug-in_Electric_Vehicle_Charging_Infrastructure_Guidelines_for_Multi-
unit_Dwellings.pdf.
Casteel, M., with Fuel Cell Energy, Inc., Danbury, CT. Telephone conversation, March 7, 2019.
CEC. n.d. Energy glossary. Sacramento, CA: California Energy Commission. https://
www.energy.ca.gov/resources/energy-glossary.
CEC. 2011. Lighting the way to demand response. Technical Brief. Sacramento, CA: California
Energy Commission’s Public Interest Energy Research Program. https://www.esource.com/
system/files/files/2011-04/CEC-TB-47_Lighting_web_7.pdf.
CEC. 2018. 2019 building energy efficiency standards for residential and nonresidential
buildings. Sacramento, CA: California Energy Commission. https://www.energy.ca.gov/
2018publications/CEC-400-2018-020/CEC-400-2018-020-CMF.pdf.
Chipley, M. 2017. Cybersecurity. Accessed 11/21/2019. https://www.wbdg.org/resources/
cybersecurity.
Cort, K. A., J.N. Haack, S. Katipamula, and N.K. Andrew. 2016. VOLTTRON™: Tech-to-market
best-practices guide for small- and medium-sized commercial buildings. PNNL-25405. Richland,
WA: Pacific Northwest National Laboratory.
CPUC. n.d. Safety best practices for the installation of energy storage. San Francisco, CA:
California Public Utilities Commission. Accessed June 2019. https://www.cpuc.ca.gov/
General.aspx?id=8863.
CPUC. 2017. Rule 21 interconnection. San Francisco, CA: California Public Utilities
Commission. https://www.cpuc.ca.gov/Rule21/.
CPUC. 2019. Decision implementing the AB 2868 energy storage program and investment
framework and approving AB 2868 applications with modification. San Francisco, CA:
California Public Utilities Commission. http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/

M269/K191/269191162.pdf.
David, B. H., N. Xu, and L. Norforf. 2016. A novel multi-market optimization problem for
commercial heating, ventilation, and air-conditioning systems providing ancillary services
using multi-zone inverse comprehensive room transfer functions. Science and Technology for the
Built Environment 22(6):783–97.
Dennis, J.S., S.G. Kelly, R.R. Nordhaus, and D.W. Smith. 2016. Federal/state jurisdictional
split: Implications for emerging electricity technologies. LBNL-1006675. Berkeley, CA:
Lawrence Berkeley National Laboratory. Accessed September 2019. https://www.energy.gov/
sites/prod/files/2017/01/f34/Federal%20State%20Jurisdictional%20Split--
Implications%20for%20Emerging%20Electricity%20Technologies.pdf
Dictionary. n.d. Dictionary online, s.v. “Net meter.”
DOE. n.d.a. Frequently asked questions—Commercial rooftop solar. Accessed September 6,
2019. https://betterbuildingsinitiative.energy.gov/sites/default/files/attachments/
BBA_Commercial_PV_Roofing_Guide_071715_508.pdf.
DOE. n.d.b. Adjustable speed drive part-load efficiency. Washington, DC: U.S. Department of
Energy’s Office of Energy Efficiency and Renewable Energy. https://www.energy.gov/sites/
prod/files/2014/04/f15/motor_tip_sheet11.pdf.
DOE. 2009. Time based rate programs. Washington, DC: U.S. Department of Energy’s Office
of Electricity.
DOE. 2012. Plug-in vehicle handbook for fleet managers. DOE/GO-102012-3273.
Washington, DC: U.S. Department of Energy. https://afdc.energy.gov/files/pdfs/
pev_handbook.pdf.
DOE. 2014a. Federal building metering guidance. Washington, DC: Department of Energy.
https://www.energy.gov/sites/prod/files/2014/11/f19/metering_guidance.pdf.
DOE. 2014. “How microgrids work.” Washington, DC: U.S. Department of Energy.
DOE. 2014b. Smart grid investments improve grid reliability, resilience, and storm responses.
Washington, DC: U.S. Department of Energy Office of Electricity Delivery and Energy
Reliability. https://www.smartgrid.gov/document/
smart_grid_investments_improve_grid_reliability_resilience_and_storm_response_0.html.
DOE. 2014c. On-site commercial solar PV decision guide. Washington DC: U.S. Department of
Energy Better Building Alliance. https://betterbuildingssolutioncenter.energy.gov/sites/
default/files/attachments/On_Site_Solar_Decision_Guide.pdf
DOE. 2015a. Decision guides for plug and process load controls. Washington, DC: U.S.
Department of Energy. https://betterbuildingssolutioncenter.energy.gov/sites/default/files/
attachments/Decision_Guides_for_PPL_Controls_0.pdf.
DOE. 2015b. United States electricity primer. DOE/OE-0017. Washington DC: U.S.
Department of Energy Office of Electricity Delivery and Energy Reliability. Accessed
February 12, 2019. https://www.energy.gov/sites/prod/files/2015/12/f28/united-states-
electricity-industry-primer.pdf.
150 | References
DOE. 2016. Advanced metering infrastructure and customer systems: Results from the smart
grid investment grant program. Washington, DC: U.S. Department of Energy Office of
Electricity Delivery and Energy Reliability. https://www.energy.gov/sites/prod/files/2016/12/
f34/AMI%20Summary%20Report_09-26-16.pdf.
DOE. 2017. On-site energy storage decision guide. Washington, DC: U.S. Department of Energy.
https://betterbuildingssolutioncenter.energy.gov/sites/default/files/attachments/
BB%20Energy%20Storage%20Guide.pdf.
DOE. 2019a. Grid-interactive efficient buildings: Overview. Washington, DC: U.S. Department
of Energy.
DOE. 2019b. Solar energy glossary. Washington, DC: U.S. Department of Energy’s Office of
Energy Efficiency and Renewable Energy. https://www.energy.gov/eere/solar/solar-energy-
glossary.
DSIRE. 2019. Database of state incentives for renewables & efficiency. Raleigh, NC: NC Clean
Energy Technology Center. Accessed July 2019. https://www.dsireusa.org/.
Duke Energy Indiana. 2019. 2019 quarterly riders. https://www.duke-energy.com/home/billing/
rates/electric-tariff.
Echelon. 2009. Introduction to the LonWorks® Platform Revision 2. https://www.echelon.com/
assets/blt893a8b319e8ec8c7/078-0183-01B_Intro_to_LonWorks_Rev_2.pdf.
ECHOtape. 2018. “Why building resilience is the future of sustainable building.” https://
www.echotape.com/blog/why-building-resilience-is-the-future-of-sustainable-building/.
Eclipse. 2019. Eclipse Volttron. https://projects.eclipse.org/projects/iot.volttron.
EESI. n.d. Beneficial electrification: An access clean energy savings program. Environmental and
Energy Study Institute. https://www.eesi.org/electrification/be
EIA. n.d. Table 3.18 (wind) and Table 3.21 (solar). In Electric power annual 2017. Retrieved
August 2, 2019. https://www.eia.gov/electricity/annual/archive/2017/xls/epa_2017.zip.
EIA. 2018a. Annual electric power industry report. Washington, DC: U.S. Energy Information
Administration. https://www.eia.gov/electricity/data/eia861/archive/zip/f8612017.zip.
EIA. 2018b. Electric sales, revenue, and average price. Washington, DC: U.S. Energy Information
Administration. https://www.eia.gov/electricity/sales_revenue_price/.
EIA. 2019a. Electric power annual 2018. Washington, DC: U.S. Energy Information
Administration. https://www.eia.gov/electricity/annual/.
EIA. 2019b. Table 5.1., Sales of electricity to ultimate customers. In Electric power monthly.
Washington, DC: U.S. Energy Information Administration. Retrieved April 6, 2019. https://
www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_01.
EIA. 2019c. EIA online glossary. Washington, DC: U.S. Environmental Protection Agency.
Accessed August 13, 2019. https://www.eia.gov/tools/glossary/index.php.
EPA. n.d. Combined heat and power (CHP) partnership. Washington, DC: U.S. Environmental
Protection Agency. https://www.epa.gov/chp.
EPA. 2018. National emission standards for hazardous air pollutants compliance monitoring.
Washington, DC: U.S. Environmental Protection Agency. https://www.epa.gov/compliance/
national-emission-standards-hazardous-air-pollutants-compliance-monitoring.
EPA. 2019. National emission standards for hazardous air pollutants (NESHAP). Washington,
DC: U.S. Environmental Protection Agency. https://www.epa.gov/stationary-sources-air-
pollution/national-emission-standards-hazardous-air-pollutants-neshap-9.
EPA. 2019b. Renewable energy certificates (RECs). Washington, DC: U.S. Environmental
Protection Agency. https://www.epa.gov/greenpower/renewable-energy-certificates-recs.
EPRI and SEPA. 2015. Rolling out smart inverters: Assessing utility strategies and approaches. White
Paper. Electric Power Research Institute and Smart Electric Power Alliance. https://
www.epri.com/#/pages/product/3002007047/?lang=en-US.
EPRI. 2010. Smart inverter functionality survey. Palo Alto, CA: Electric Power Research
Institute.
EPRI. 2012. Advanced power system management functions and information exchanges for
inverter-based DER devices modelled in IEC 61850-97-7. Palo Alto, CA: Electric Power
Research Institute.
EPRI. 2016. Smart grid ready inverters with utility communication. 0479-1562. Palo Alto, CA:
Electric Power Research Institute.
ERCOT. 2019. Company profile. Accessed April 14, 2019. http://www.ercot.com/about/profile.
Fabrizio, K., R. Stuebi, J.Benzaoui, and R. Smith. 2018. Multi-user microgrids: Obstacles to
development and recommendations for advancement. Boston, MA: Boston University’s
Institute of Sustainable Energy.
FERC. 2011. Demand response compensation in organized wholesale energy markets. 134
FERC ¶ 61,187. March 15, 2011. https://www.ferc.gov/EventCalendar/Files/
20110315105757-RM10-17-000.pdf.
FERC. 2016. Standard interconnection agreements & procedures for small generators.
Washington, DC: Federal Energy Regulatory Commission. https://www.ferc.gov/industries/
electric/indus-act/gi/small-gen.asp.
FERC. 2018a. 2018 assessment of demand response and advanced metering. Washington, DC:
Federal Energy Regulatory Commission. https://www.ferc.gov/legal/staff-reports/2018/DR-
AM-Report2018.pdf.
FERC. 2018b. Distributed energy resources–Technical considerations for the bulk power system;
Notice inviting post-technical conference comments. Federal Register. Washington, DC:
Federal Energy Regulatory Commission. https://www.federalregister.gov/documents/2018/
05/04/2018-09450/distributed-energy-resources-technical-considerations-for-the-bulk-
power-system-notice-inviting.
FERC. 2019. Regional transmission organizations (RTO)/independent system operators (ISO).
Washington, DC: Federal Energy Regulatory Commission. Accessed July 10, 2019. https://
www.ferc.gov/industries/electric/indus-act/rto.asp.
152 | References
Fields, A. 2016. “Combined heat and power (CHP).” In Whole building design guide. Washington,
DC: National Institute of Building Sciences. https://www.wbdg.org/resources/combined-
heat-and-power-chp.
Fisher, D., B. Isler, and M. Osborne. 2018. BACnet secure connect. http://www.bacnet.org/
Bibliography/B-SC-Whitepaper-v10_Final_20180710.pdf.
Fitzgerald, G., J. Mandel, and H. Touati. 2015. The economics of battery energy storage: How
multi-use, customer-sited batteries deliver the most services and value to customers and the
grid. Boulder, CO: Rocky Mountain Institute. https://rmi.org/wp-content/uploads/2017/05/
RMI_Document_Repository_Public-Reprts_RMI-TheEconomicsOfBatteryEnergyStorage-
ExecutiveSummary.pdf.
Glazer, J. 2019. ASHRAE design guide for cool thermal storage, second edition. Atlanta: ASHRAE.
Goldie-Scot, L. 2019. A behind the scenes take on lithium-ion battery prices. BloombergNEF.
https://about.bnef.com/blog/behind-scenes-take-lithium-ion-battery-prices/.
GPO. 2019. Code of federal regulations. Washington, DC: U.S. Government Publishing Office.
Greacen, C., R. Engel, and T. Quetchenbach. 2013. A guidebook on grid interconnection and
islanded operation of mini-grid power systems up to 200 kW. LBNL-6224E. Berkeley, CA:
Lawrence Berkeley National Laboratory.
Hawaiian Electric. n.d. Products and services. https://www.hawaiianelectric.com/products-and-
services/customer-renewable-programs
Hawaii House of Representatives. 2015. House Bill No. 623 H.D. 2 Renewable Portfolio
Standards. https://www.capitol.hawaii.gov/session2015/bills/HB623_CD1_.htm.
Hawaii PUC. 2018. Report to the 2019 legislature on Hawaii’s renewable portfolio standards.
Honolulu, HI: State of Hawaii Public Utilities Commission. https://puc.hawaii.gov/wp-
content/uploads/2018/12/RPS-2018-Legislative-Report_FINAL.pdf.
Hawaii State Legislature. 2015. H.B. 263, Renewable Portfolio Standards; Clean Energy
Initiative; Public Utilities Commission. 28th Leg., Reg. Sess. Honolulu, HI: State of Hawaii
Legislature.
HEC. 1988. Rule No. 14, Service Connections and facilities on customer’s premises. Honolulu,
HI: Hawaiian Electric Company. Retrieved July 1, 2019. https://www.hawaiianelectric.com/
documents/billing_and_payment/rates/hawaiian_electric_rules/14.pdf.
Hawxhurst, K., J. Williams, and A. Pollman. 2017. Renewable-powered HVAC with thermal
storage. ASHRAE Journal: December 2017. Atlanta: ASHRAE.
Hood, S. 2017. Flywheels are a sustainable uninterruptible power supply (UPS) choice in
healthcare. Washington, DC: Affiliated Engineers.
ICC. 2018. IgCC/189.1, International green construction code® powered by ANSI/ASHRAE/ICC/
USGBC/IES Standard 189.1. Washington, DC: International Code Council.
IEEE. 2011. IEEE 2030-2011, Guide for smart grid interoperability of energy technology and
information technology operation with the electric power system (EPS), end-use applications, and
loads. Piscataway, NJ: Institute of Electrical and Electronics Engineers. https://
ieeexplore.ieee.org/document/6018239.
IEEE. 2017a. IEEE 2030.7-2017, IEEE standard for the specification of microgrid controllers.
Piscataway, NJ: Institute of Electrical and Electronics Engineers.
IEEE. 2017. National electrical safety code®. Piscataway, NJ: Institute of Electrical and Electronics
Engineers.
IEEE. 2018. IEEE 1547-2018, IEEE standard for interconnection and interoperability of distributed
energy resources with associated electric power systems interfaces. Piscataway, NJ: Institute of
Electrical and Electronics Engineers. https://doi.org/10.1109/IEEESTD.2018.8332112.
IEEE. 2019. IEEE P2030.9-2019, IEEE recommended practice for the planning and design of the
microgrid. Piscataway, NJ: Institute of Electrical and Electronics Engineers. https://
ieeexplore.ieee.org/document/8746836.
IES. 2011. The lighting handbook: Reference and application. New York: The Illuminating
Engineering Society.
ISO NE. n.d. Natural gas infrastructure constraints. Holyoke, MA: ISO New England. Accessed
2019. https://www.iso-ne.com/about/what-we-do/in-depth/natural-gas-infrastructure-
constraints.
Jackson, C. 2017. Commercial lighting’s role in automated demand response programs. https://
www.ies.org/lda/commercial-lightings-role-in-automated-demand-response-programs/.
Jie, C., and J. Braun. 2019. Laboratory-based assessment of HVAC equipment for power grid
frequency regulation: Methods, regulation performance, economics, indoor comfort and
energy efficiency. Energy & Buildings 185:148–61.
Kelly, J., and C. Yan. 2015. “PEER and the microgrid architecture.” Washington, DC: U.S.
Green Building Council. https://www.usgbc.org/articles/peer-and-microgrid-architecture.
Kim, Y.-J., D. Blum, N. Xu, L. Su, and L. Norford. 2016. Technologies and magnitude of
ancillary services provided by commercial buildings. Proceedings of the IEEE 104(4): 758-779.
Knox, N. 2015. May you find LEED at the end of your rainbow [video]. Washington, DC: U.S.
Green Building Council. https://www.usgbc.org/articles/may-you-find-leed-end-your-
rainbow-video.
Lam, B. 2017. How IoT technology aims to add value for commercial real estate companies.
Deloitte Luxembourg. https://www2.deloitte.com/lu/en/pages/real-estate/articles/smart-
buildings-iot-technology-add-value-commercial.html.
Lasseter, R.H. 2002. MicroGrids. Proceedings of the 2002 IEEE Power Engineering Society Winter
Meeting. https://doi.org/10.1109/PESW.2002.985003.
Lazar, J., and W. Gonzalez. 2015. Smart rate design for a smart future. Montpelier, VT:
Regulatory Assistance Project. http://www.raponline.org/document/download/id/7680.
LBNL. 2007. Introduction to commercial building control strategies and techniques for demand
response. LBNL Report Number 59975. Berkeley, CA: Lawrence Berkeley National
Laboratory.
LBNL. 2015. Distributed energy systems integration and demand optimization for autonomous
operations and electric grid transactions. LBNL- 1003742. Berkeley, CA: Lawrence Berkeley
National Laboratory.
154 | References
LBNL. 2019a. Demand response quick assessment tool (DRQAT). https://drrc.lbl.gov/tools/

demand-response-quick-assessment-tool-drqat.
LBNL. 2019b. Tracking the sun: Pricing and design trends for distributed photovoltaic systems in the
United States, 2019 edition. Berkeley, CA: Lawrence Berkeley National Laboratory.
Lisell, L., T. Tetreault, and A. Watson. 2009. Solar ready buildings planning guide. Technical
Report NREL/TP-7A2-46078. Golden, CO: National Renewable Energy Laboratory.
https://www.nrel.gov/docs/fy10osti/46078.pdf.
Liu, C., and A.P. Leed. 2019. Sustainability and resiliency—Strategies from community to
equipment. High Performing Buildings Magazine. http://www.hpbmagazine.org/attachments/
article/12564/18-29_HPB Winter 2019_Liu CL_sustainability.pdf.
London Economics International, LLC. 2019. Evaluation of utility ownership and regulatory
models for Hawaii. Retrieved July 1, 2019. https://energy.hawaii.gov/wp-content/uploads/
2019/06/HI_DBEDT_UtilityModelStudy.pdf.
MacDonald, J., S. Kiliccote, J. Boch, J. Chen, and R. Nawy. 2014. Commercial building loads
providing ancillary services in PJM. ACEEE Summer Study on Energy Efficiency in
Buildings 2014.
Makhyoun, M., and M. Taylor. 2014. Electric utilities, energy storage, and solar: Trends in
technologies, applications, and costs. Washington, DC: Smart Electric Power Alliance.
https://sepapower.org/resource/electric-utilities-energy-storage-and-solar-trends-in-
technologies-applications/.
Merriam-Webster. n.d. Merriam-Webster online. s.v. “carbon offset.” Accessed November 2019.
https://www.merriam-webster.com/dictionary/carbon%20offset.
Minear, E. 2017. ESIC energy storage implementation guide. EPRI Report 3002010896. Palo Alto,
CA: Electric Power Research Institute. https://www.epri.com/#/pages/product/3002010896/
?lang=en-US.
Monitoring Analytics. 2019. Section 6, Demand response. In State of the market report for PJM.
http://www.monitoringanalytics.com/reports/PJM_State_of_the_Market/2018/2018-som-
pjm-sec6.pdf.
Moriarity, M. 2018. “How smart buildings increase property value.” https://www.75f.io/blog/
how-smart-buildings-increase-property-value.
NASA. 2019. “Climate change evidence: How do we know?” Accessed July 9, 2019. https://
climate.nasa.gov/evidence/.
Navigant. 2014. Global distributed generation deployment forecast: solar pv, small wind, fuel cell,
natural gas generator set, and diesel generator set capacity and revenue by country and
technology. Chicago, IL: Navigant Research.
Neilson, C. 2013. BACnet today and the smart grid: Securing a control systems network.
ASHRAE Journal, November 2013: B18–B22.
NERC. 2017. Distributed energy resources: Connection modeling and reliability considerations.
Atlanta, GA: North American Electric Reliability Corporation. https://www.nerc.com/
comm/Other/essntlrlbltysrvcstskfrcDL/Distributed_Energy_Resources_Report.pdf.
NBI. 2015. Plug load best practices guide: Managing your office equipment plug load. Portland,
OR: New Buildings Institute. https://newbuildings.org/wp-content/uploads/2015/11/
PlugLoadBestPracticesGuide1.pdf
NBI. 2019. Automated demand response in new construction technical design guidelines.
Portland, OR: New Buildings Institute.
Newsham, G., and B. Birt. 2010. Demand-responsive lighting—A field study. LEUKOS: The
Journal of the Illuminating Engineering Society 6(3):203–26.
Newsham, G., S. Mancini, and R. Marchand. 2008. Detection and acceptance of demand-
response lighting in offices with and without daylight. LEUKOS: The Journal of the
Illuminating Engineering Society 4(3): 139-156.
NFPA. n.d. NFPA 855, Standard for the installation of stationary energy storage systems.
Quincy, MA: National Fire Protection Association.
NFPA. 2011. NFPA 2, Hydrogen technologies code. Quincy, MA: National Fire Protection
Association.
NFPA. 2017. NFPA 70®, National electrical code®. Quincy, MA: National Fire Protection
Association.
NFPA. 2019. NFPA 110, Standard for emergency and standby power systems. Quincy, MA:
National Fire Protection Association.
NIST. 2014a. Guidelines for smart grid cybersecurity. Washington, DC: National Institute of
Standards and Technology. https://nvlpubs.nist.gov/nistpubs/ir/2014/NIST.IR.7628r1.pdf.
NIST. 2014b. NIST Framework and roadmap for smart grid interoperability standards, Release 3.0.
Washington, DC: National Institute for Standards and Technology. https://www.nist.gov/
sites/default/files/documents/smartgrid/NIST-SP-1108r3.pdf
NIST. 2015. Guide to industrial control systems security. NIST SP800-82. Washington, DC:
National Institute of Standards and Technology.
NIST. 2017. Transactive energy: An overview. Accessed July 12, 2019. https://www.nist.gov/
engineering-laboratory/smart-grid/transactive-energy-overview.
NIST. 2018. Cybersecurity framework version 1.1. https://www.nist.gov/cyberframework/
framework.
NRCA. 2018. NRCA guidelines for rooftop-mounted photovoltaic systems, second edition.
Rosemont, IL: National Roofing Contractors Association.
NREL. n.d. HOMER. Golden, CO: National Renewable Energy Laboratory. https://
www.homerenergy.com/.
NREL. 2014. Advanced inverter functions to support high levels of distributed solar: Policy and
regulatory considerations. Golden, CO: National Renewable Energy Laboratory. https://
www.nrel.gov/docs/fy15osti/62612.pdf.
NREL. 2015. Industry perspectives on advanced inverters for US solar PV systems. Golden, CO:
National Renewable Energy Laboratory.
156 | References
NY-CRR. 2011. Official compilation of codes, rules and regulations of the State of New York,
Title 6. department of environmental conservation, Chapter III. Air resources, Subchapter A.
Prevention and control of air contamination and air pollution, Part 231. New source review
for new and modified facilities. Albany, NY: New York Codes, Rules and Regulations.
NY Gov. 2016. Reforming the energy vision. Albany, NY: NY Gov. https://www.ny.gov/sites/
ny.gov/files/atoms/files/WhitePaperREVMarch2016.pdf.
OpenADR Alliance. n.d. OpenADR certification process. https://www.openadr.org/
certification-process.
OpenADR Alliance. 2012. The OpenADR primer: An introduction to Automated Demand
Response and the OpenADR Standard. Morgan Hill, CA: OpenADR Alliance.
OpenADR Alliance. 2013. OpenADR 2.0 profile specification B profile. Document number
20120912-1. Morgan Hill, CA: OpenADR Alliance.
OpenADR Alliance. 2019a. Products. https://products.openADR.org/.
OpenADR Alliance. 2019b. Security and security certificates for OpenADR systems. https://
www.openadr.org/assets/openadr%20security%20certificates%20-
%20a%20brief%20overview%20-%20v1.pdf.
OpenADR Alliance. 2019c. OpenADR and cyber security. https://www.openADR.org/cyber-
security.
OpenADR Alliance. 2019d. OpenADR 2.0 specifications. https://www.openadr.org/
specification-download.
Pavlak, G. S., G.P.Henze, and V.J.Cushing. 2014. Optimizing commercial building participation
in energy and ancillary service markets. Energy & Buildings 84:115–26.
PG&E. Electric Rule 21. San Francisco, CA: Pacific Gas and Electric Company. https://
www.pge.com/includes/docs/pdfs/b2b/interconnections/ElectricRule21.pdf.
Piette, M. A., D.S. Watson, N. Motegi, and N. Bourassa. 2005. Findings from the 2004 fully
automated demand response tests in large facilities. LBNL-58178. Berkeley, CA: Lawrence
Berkeley National Laboratory.
PJM. 2018. Leading through the transition: PJM 2018 annual report. https://www.pjm.com/-/
media/about-pjm/newsroom/annual-reports/2018-annual-report.ashx?la=en.
PJM. 2019. Jetstream. https://pjm.com/markets-and-operations/etools/jetstream.aspx.
Pless, S., A. Walker, and O. Van Greet with National Renewable Energy Laboratory, Lakewood,
CO. Telephone conversation, April 2019.
PNNL. 2019a. Demand response (DR) agent. https://transactionalnetwork.pnnl.gov/
demand.stm.
PNNL. 2019b. Transactive control design for commercial buildings to provide demand response.
Richland, WA: Pacific Northwest National Laboratory.
PNNL. 2019c. Volttron. https://volttron.org/.
Reiter, E., K. Ardani, R. Margolis, and R. Edge. 2015. Industry perspectives on advanced
inverters for us solar pv systems: grid benefits, deployment challenges, and emerging
solutions. Technical Report NREL/TP-7A40-65063. Golden, CO: National Renewable
Energy Laboratory. https://www.nrel.gov/docs/fy15osti/65063.pdf.
Remington, G. 2019. Impacts of on-site battery storage on HVAC and other facility loads—
Control strategies for peak load management and demand response programs. Presented at
the 2019 ASHRAE Winter Conference, Atlanta, Georgia.
Resilient Design Institute. n.d. Resilient design strategies. https://www.resilientdesign.org/
resilient-design-strategies/.
Rosewater, D., and S. Ferreira. 2016. Development of a frequency regulation duty-cycle for
standardized energy storage performance testing. Journal of Energy Storage 7:286–94.
Rowley, P., and T. Kingston, with Gas Technology Institute, Des Plaines, IL. Correspondence,
April 3, 2019.
SCE. 2017. Laboratory assessment of demand response rooftop unit controller. Rosemead, CA:
Southern California Edison.
SEIA. 2019. SEIA/Wood Mackenzie Power & Renewables U.S. solar market insight™. Washington,
DC: Solar Energy Industries Association. https://www.seia.org/research-resources/solar-
market-insight-report-2019-q2.
SEPA. 2016. Distributed energy resources capabilities guide. Washington, DC: Smart Electric
Power Association. https://sepapower.org/resource/a-comprehensive-guide-to-electric-
vehicle-managed-charging/.
SEPA. 2019a. Grid standards map. http://www.gridstandardsmap.com/.
SEPA. 2019b. Utilities and electric vehicles: The case for managed charging—A comprehensive
guide. Washington, DC: Smart Electric Power Association. https://sepapower.org/resource/
a-comprehensive-guide-to-electric-vehicle-managed-charging/.
Silvetti, B. 2002. Application fundamentals of ice-based thermal storage. ASHRAE Journal:
February 2002. Atlanta: ASHRAE.
Smith, S. 2011. PV trackers. SolarPro: June/July 2011.
SNL. n.d. Energy infrastructure resilience: Framework and sector-specific metrics. Albuquerque,
NM: Sandia National Laboratories.
State of New York Public Commission. 2014. CASE 14-E-0302, Petition of consolidated Edison
Company of New York, Inc. for approval of Brooklyn Queens Demand Management Program.
Albany, NY: State of New York Public Commission.
The World Bank. 2017. Solar resource maps of world and GIS data for more than 200+
countries. https://solargis.com/maps-and-gis-data/download/world/.
Ton, D.T and M. Smith. 2012. The U.S. Department of Energy’s microgrid initiative. The
Electricity Journal 25(8): 84-94. https://doi.org/10.1016/j.tej.2012.09.013.
UL. 2010. UL 1741, Standard for inverters, converters, controllers and interconnection system
equipment for use with distributed energy resources. Northbrook, IL: UL LLC.
158 | References
UL. 2016. UL 1741, Supplement SA, Grid Support Utility Interactive Inverters and Converter.
Northbrook, IL: UL LLC.
UL. 2018. UL 9540A, Test method for evaluating thermal runaway fire propagation in battery
energy storage systems. Northbrook, IL: UL LLC.
USGBC. 2019. LEED v4.1. Accessed August 20, 2019. https://new.usgbc.org/leed-v41.
Van Asselt, A., D.T. Reindl, and G.F. Nellis. 2018. Strategies to increase deployment of
renewables using cool thermal energy storage (RP-1607). ASHRAE Transactions 124(1).
Atlanta: ASHRAE.
Vrettos, E., E.C. Kara, J. MacDonald, G. Anderson, and D.S. Callaway. 2018. Experimental
demonstration of frequency regulation by commercial buildings—Part I: Modeling and
hierarchical control design. IEEE Transactions on Smart Grid 9(4).
WBDG. 2016. Fuel cells and renewable hydrogen. Washington DC: U.S. Department of Energy
Federal Energy Management Program. Accessed August 2019. https://www.wbdg.org/
resources/fuel-cells-and-renewable-hydrogen.
Wilson, M. 2018. Lazard’s levelized cost of storage analysis, Version 4.0. https://www.lazard.com/
media/450774/lazards-levelized-cost-of-storage-version-40-vfinal.pdf.
Withnell, D. D., D.B. Leahy, and M.A. Coleman. 1996. Promoting wholesale competition
through open access non-discriminatory transmission services by public utilities; recovery of
stranded costs by public utilities. Washington, DC: U.S. Department of Energy Federal
Energy Regulatory Commission.
Yin, R., D. Black, M. Piette, and K. Scheiss. 2015. Control of thermal energy storage in
commercial buildings for California utility tariffs and demand response. Berkeley, CA:
Lawrence Berkeley National Laboratory.
COMPREHENSIVE GUIDANCE ON SMART GRID INTEGRATION
Smart Grid Application Guide: Integrating Facilities with the Electric
Grid provides building owners, managers, and designers with guidance
on the smart grid, applicable smart grid standards and regulations,
and the design and operation of systems in this emerging industry.
Smart Grid Application Guide details the concrete steps needed to
prepare a building—whether new construction or renovation—for
integration with the smart grid.
This guide includes sections on:

• Navigating regulatory environments that affect deployment of
the smart grid
• Demand-side management
• Behind-the-meter distributed energy resources
• Multiple-facility operation, including microgrids and customer
aggregation for demand response
• Meeting building needs during interruptions to grid services
Created as part of 2018–2019 ASHRAE President Sheila J. Hayter’s

presidential initiative, the Smart Grid Application Guide puts relevant
information about the new energy future at a building professional’s
fingertips.
ISBN 978-1-947192-38-6 (paperback)

ISBN 978-1-947192-39-3 (PDF)
ISBN 9781947192386
9 781947 192386
Product Code: 90479 1/20
ASHRAE
1791 Tullie Circle, NE, Atlanta, GA 30329
ashrae.org | 404-636-8400 (worldwide)

Ashrae D 90479

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ashrae D 90479

Uploaded by

Copyright:

Available Formats

SMART GRID

Smart Grid Application Guide Ad Hoc Committee

Updates and errata for this publication will be posted on the

Library of Congress Control Number: 2020930142

CHAPTER 1 Introduction ......................................................................1

1.1 THE PURPOSE OF THIS GUIDE .............................................................................. 1

CHAPTER 2 Assessing the Value of Smart Grid Technologies—

2.1 MANDATED PROGRAMS—The California Example ......................................... 6

2.5.2 Opportunities to Participate in Wholesale Markets ..............................15

CHAPTER 3 Assessing The Value Of Smart Grid Technologies—

3.1 DEFINING ELECTRICITY USAGE METRICS............................................................ 24

CHAPTER 4 Deploying Smart Grid Technologies—

4.1 DEFINING DISTRIBUTED ENERGY RESOURCES .................................................... 43

4.3.2 Operational Considerations....................................................................49

CHAPTER 5 Deploying Smart Grid Technologies—

5.1 ELECTRIC RATE SELECTION.................................................................................. 73

CHAPTER 6 Deploying Smart Grid Technologies—

6.1 RESILIENCY .......................................................................................................... 79

CHAPTER 7 Deploying Smart Grid Technologies—

7.1 POTENTIAL CONSTRAINTS TO CONSIDER........................................................... 87

CHAPTER 8 Building Design Considerations ......................................97

8.1 BUILDING CODES, STANDARDS, AND LEED ....................................................... 97

CHAPTER 9 Microgrids ...................................................................... 119

9.1 DEFINITION ....................................................................................................... 119

CHAPTER 10 Glossary ..........................................................................127

CHAPTER 12 Bibliography .................................................................. 139

CHAPTER 13 References..................................................................... 147

• David Blum, Lawrence Berkeley National Laboratory

• Andrew Gouin, Xcel Energy

Steven T. Bushby, Fellow ASHRAE

1.1 PURPOSE OF THIS GUIDE

1.2 WHAT IS NOT COVERED?

1.3 GRID SERVICES DEFINED

Table 1.1 Definitions and Examples of Grid Services

• Reduction in peak • Reduction in peak • Frequency regulation • Voltage compensation

demand to keep the demand with • Ramping for distribution circuits

grid from being increase in

• Defers need for generation generators to respond cause line voltage

distribution capacity shifting energy generator outages equipment overheating.

• Non-wires solutions • Real-time rates

• Dispatchable • Energy storage • Variable-frequency • Advanced inverters

distributed generation systems drives (VFDs)

Note: Graphics from DOE (2019).

2.1 MANDATED PROGRAMS—The California Example

2.1.1 California Energy Commission Regulations

2.1.2 The Duck Curve and California Public Utility Commission

Figure 2.2 The California ISO duck curve.

• CPUC Electric Rule 21 (http://www.cpuc.ca.gov/Rule21/), which covers the interconnection

2.1.3 What are the Implications for Working in this Environment?

2.2 FREE-MARKET PROGRAMS—The Texas ERCOT Example

2.2.1 What are the Implications for Working in this Environment?

2.3 TRADITIONAL UTILITY PROGRAMS—The Southeastern U.S. Example

2.3.1 What are the Implications for Working in this Environment?

2.4 REDESIGNED UTILITY BUSINESS MODEL PROGRAMS—

The Brooklyn-Queens Demand Management (BQDM) project is often pointed to as an early

2.4.1 What are the Implications for Working in this Environment?

2.5 WHOLESALE MARKET PROGRAMS AND STATE/FEDERAL

2.5.1 Wholesale Power Markets in the U.S.

• The California Independent System Operator (CAISO)

2.5.2 Opportunities to Participate in Wholesale Markets

Figure 2.4 ISO/RTO Map (updated to show MISO presence in Canada).

2.5.3 Legal Challenges Involved with Participating in

when a demand response resource participating in an organized wholesale energy market